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On Thursday, Stifel analysts revised their price target for Marvell Technology (NASDAQ:MRVL), reducing it to $80 from the previous target of $115. Despite the decrease, they retained a Buy rating on the company’s shares. According to InvestingPro data, analyst targets for Marvell currently range from $60 to $140, with a strong consensus recommendation of 1.38 (where 1.0 represents a Strong Buy). The adjustment follows Marvell’s strong performance in AI-related revenues, which have substantially exceeded the company’s earlier forecast of over $1.5 billion for FY25E. The firm is also on a solid path to outdo its FY26E target of more than $2.5 billion, thanks to growing demand from cloud service providers for optical connectivity and, more notably, for custom ASIC products. InvestingPro data shows the company’s revenue grew 4.71% in the last twelve months to $5.77 billion, with analysts expecting 42% growth in the upcoming fiscal year.
Stifel’s analysis indicates that Marvell’s data center revenue has seen significant growth in recent quarters. This success is attributed to the company’s strategic shift towards custom AI silicon. While the company currently operates with a moderate debt level and maintains a healthy current ratio of 1.54, InvestingPro analysis reveals 20 analysts have recently revised their earnings expectations upward for the upcoming period. The analysts believe this move has validated the company’s approach and has set the stage for Marvell to potentially double its market share. The current market share projection is to increase from approximately 10% in CY24 to a potential 20% by CY28E, in a market that is estimated to be worth over $75 billion.
The analysts at Stifel have expressed confidence in Marvell’s trajectory, citing the company’s ability to capitalize on the expanding market opportunity. Marvell’s focus on custom AI silicon appears to be a strategic decision that aligns with the needs of its cloud service provider customers. This specialized segment is seen as highly profitable, and Marvell’s advancements suggest a promising future in this domain.
Marvell’s progress in AI-related products is particularly noteworthy as it demonstrates the company’s adaptability and foresight in a competitive technology sector. The firm’s emphasis on innovation and meeting the demands of cloud service providers has been a key factor in its recent revenue achievements.
In summary, while the price target for Marvell has been lowered by Stifel, the firm maintains a positive outlook on the stock, supported by Marvell’s strong performance in AI-related revenues and strategic positioning in the market. The company’s focus on custom AI silicon is expected to drive growth and market share expansion in the coming years. For deeper insights into Marvell’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, along with 14 additional exclusive InvestingPro Tips, available on InvestingPro.
In other recent news, Marvell Technology has announced the sale of its Automotive Ethernet business to Infineon (OTC:IFNNY) Technologies for $2.5 billion in cash, expected to close in 2025. This transaction, which includes the Brightlane Auto Ethernet portfolio, is anticipated to contribute $225-250 million in revenue for fiscal 2026. Analysts from firms like Stifel and Raymond (NSE:RYMD) James view this divestiture as a strategic move, allowing Marvell to focus more on its core data center operations, which account for 75% of its sales. Stifel has maintained a Buy rating with a price target of $115, while Raymond James has reiterated an Outperform rating with a $110 price target. The sale is seen as financially beneficial for Marvell, with the cash influx expected to bolster its balance sheet and potentially facilitate stock buybacks. Additionally, Marvell’s President of Products and Technologies, Raghib Hussain, is set to resign in May 2025 to become CEO of another company. The company has activated a succession plan to ensure a smooth transition of Hussain’s responsibilities. These developments underscore Marvell’s strategic realignment towards its data infrastructure market focus.
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