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Investing.com -- Marvell Technology (NASDAQ:MRVL) stock fell 1.9% in afterhours trading Tuesday following a downgrade from TD Cowen analyst Joshua Buchalter, who cited concerns about visibility in the company’s cloud business.
Buchalter downgraded Marvell to Hold from Buy, maintaining an $85 price target. The analyst expressed difficulty in validating Wall Street’s fiscal 2027 datacenter estimates due to low visibility in the custom XPU (accelerated computing) segment. This concern, combined with increasing competition in Marvell’s electro-optics business, led to slightly reduced estimates.
The downgrade comes after Marvell shares have surged approximately 30% over the past month, creating what Buchalter describes as a balanced risk/reward scenario. While acknowledging Marvell as an AI beneficiary with strong intellectual property, the analyst indicated there are "cleaner stories elsewhere" in the sector.
TD Cowen’s concerns specifically center on the "lumpiness" of Marvell’s custom silicon business, which the firm views as an inherent characteristic rather than a temporary issue. The lack of clarity regarding follow-on customer wins, particularly in next-generation programs such as Amazon’s Trainium 3, raises questions about the long-term stability of this business segment despite its significant total addressable market potential.
Marvell’s datacenter business has nearly tripled in size over the past two years, driven by initial custom XPU wins and its portfolio of networking silicon supporting AI infrastructure.