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Investing.com -- Bank of America cut its rating on Marvell Technology to Neutral from Buy in a note to clients on Friday, citing reduced confidence in the company’s artificial intelligence (AI) growth trajectory through 2026.
The bank’s price target for the stock was lowered to $78 from $90.
“We downgrade MRVL stock to Neutral from Buy, lower FY27/28E (roughly CY26/27) pf-EPS by 10%/14% to $3.20/$3.67, and take our PO to $78 from $90,” BofA said.
The valuation is now based on 24x CY26 estimated earnings, down from 25x, but still in line with Marvell’s historical multiples.
BofA analysts said they “did not hear the same level of confidence/visibility about MRVL’s AI growth prospects in the near/medium term.”
The firm pointed to “incrementally higher uncertainty” around “the timing of MRVL’s new (Microsoft Maia) project” and its share in Amazon’s next-generation 3nm chip program.
As a result, the bank cut its CY26 data center growth forecast to mid-teens year-on-year from a prior 23-25%.
“All-in, we estimate DC is exiting FY26/CY25E at a $100mn lower quarterly run-rate, and hence a $400mn drag on projected FY27/CY26 sales,” BofA noted.
Recent performance also weighed on sentiment. Marvell slightly missed second-quarter data center guidance, grew just 3% quarter-on-quarter, and guided third-quarter data center revenue as flat versus consensus expectations for a 5% gain.
Still, BofA cited valuation support and balance sheet strength. “At after-hours price, MRVL is trading at 20x-21x PE, which tends to provide a floor to compute stocks with strong breadth of IP,” analysts wrote, adding that $2.5 billion in proceeds from its auto divestiture could fund buybacks or acquisitions.