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On Tuesday, Susquehanna maintained a Positive rating on Marvell (NASDAQ:MRVL) but reduced the price target to $90 from $110. Currently trading at $60.69 with a market capitalization of $52.4 billion, Marvell has shown significant price volatility, with the stock down about 45% year-to-date. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value metrics. The adjustment follows Susquehanna’s analysis of potential challenges and competitive risks facing the company, particularly in its Inphi (NASDAQ:IPHI) and custom ASIC segments. Marvell is expected to report its earnings on Thursday, May 29, 2025, with projections to be generally in line with guidance. However, concerns have arisen due to increased variability in T2 volume deployment and a less optimistic view on XPUs/Inphi after the postponement of Marvell’s Investor Day.
The company had previously decided to delay its Investor Day, originally scheduled for June 10, 2025, due to the dynamic macroeconomic environment. Instead, Marvell plans to conduct a webinar focusing on the future of custom silicon for AI infrastructure. InvestingPro data reveals that Marvell maintains a "Fair" overall financial health score of 2.0 out of 5, with particularly strong scores in cash flow management. For deeper insights into Marvell’s financial health and 12 additional ProTips, subscribers can access the comprehensive Pro Research Report. In the same announcement, Marvell reaffirmed its April quarter revenue midpoint of $1.875 billion, which was seen as underwhelming considering the modest guidance for April and strong AI results from competitors.
The overall demand for data centers remains strong, supported by hyperscalers’ continued investment in AI, which should benefit Marvell’s Inphi PAM4 DSPs and custom ASIC/AI products. However, the company may not fully capitalize on this trend due to a lower-than-expected implied average selling price (ASP) for its Trainium2 product and modest quarter-over-quarter growth in the data center sector, indicating only slight growth from Amazon (NASDAQ:AMZN).
Visibility into Trainium2 production is limited to one or two more quarters, raising concerns about a potential pause until Trainium3 is ready in late 2025 or early 2026. Additionally, Marvell faces increasing competition from companies such as Alchip offering alternatives. Despite Marvell’s advantageous position with 3nm technology, competitors like Broadcom (NASDAQ:AVGO), Credo, and MaxLinear are emerging with competitive offerings, and NVIDIA (NASDAQ:NVDA) is expected to introduce a strong 3nm DSP later in the year.
In other sectors, cloud nearline demand appears positive for Marvell’s storage business, and recent results from Nokia (HE:NOKIA) and Samsung (KS:005930) suggest a favorable outlook for Carrier Infrastructure. Enterprise Networking also shows promise based on insights from Cisco (NASDAQ:CSCO) and Arista. However, the consumer segment experienced a setback with Sony (NYSE:SONY)’s PS5 sales falling short of expectations. Gross margins for Marvell may face near-term pressures as the ramp-up of custom silicon could dilute margins.
In conclusion, while the AI demand environment and certain industry segments appear strong, Susquehanna highlights the need for caution due to growing competitive pressures and a mix of positive and challenging indicators. Despite current challenges, InvestingPro data shows analysts expect significant sales growth this year, with revenue projected to grow by 42%. The firm reiterates its Positive rating on Marvell shares but with a lowered price target, reflecting the nuanced outlook for the company. With analyst targets ranging from $60 to $135 and a strong consensus recommendation of 1.51 (where 1 is Strong Buy), professional investors maintain an optimistic long-term view.
In other recent news, Marvell Technology has been in the spotlight due to various developments. The company is expected to report April quarter results of approximately $1.875 billion, with guidance for the July quarter projected to exceed $2 billion, reflecting steady growth. Analysts from JPMorgan and Stifel have maintained positive outlooks, with JPMorgan reiterating an Overweight rating and a $130 price target, while Stifel maintains a Buy rating with an $80 target. However, Melius Research downgraded Marvell from Buy to Hold, keeping the price target at $66, citing that expected positive outcomes have not materialized as anticipated.
Morgan Stanley (NYSE:MS) has also kept its Equalweight rating and a $90 price target, affirming that Marvell retains its design with Microsoft (NASDAQ:MSFT)’s Maia 2, contrary to rumors of losing it to Broadcom. The company has announced a webinar to highlight its custom AI infrastructure ASIC business, a key growth segment, while postponing its Investor Day to 2026. Marvell’s AI ASIC and networking revenues are estimated to reach $4 billion this year, despite the anticipated divestiture of its automotive business in 2025. These developments reflect a mixed sentiment among analysts, with some maintaining confidence in Marvell’s growth prospects while others adopt a more cautious stance.
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