Marvell Technology: A Key Player in the AI Race?

As I delved into the world of artificial intelligence (AI), I couldn’t help but notice the buzz surrounding Marvell Technology (NASDAQ: MRVL). With its impressive networking portfolio and custom ASIC (application-specific integrated chip) business, many investors believe Marvell is poised to become a key player in the AI race. But did its recent quarterly results live up to the hype?

AI data centers are booming, but at the expense of everything else.

The short answer is no. Marvell’s AI-related business didn’t quite meet expectations, causing its shares to plummet 10.5% on Friday. However, a closer look at the numbers reveals a more nuanced story. While revenue declined 12% to $1.16 billion, and adjusted earnings per share (EPS) dropped 22.5%, these declines were largely in line with analyst expectations.

“The data center segment is now the company’s largest, and its huge weighting will likely lift growth in the next quarter and through 2024.” - Management

The data center segment, which includes AI revenue, is now Marvell’s largest and most promising segment. Management attributed the strong sequential growth mainly to custom ASICs, which are employed by large cloud infrastructure giants in the design of their own custom AI accelerators.

Custom ASICs are driving growth in Marvell’s data center segment.

Despite the recent decline, most analysts remain upbeat on Marvell, as the AI story remains intact. The huge declines in its other segments set those segments up for a recovery as the economy improves. Trends like increased optical connectivity and cloud giants producing their own custom accelerators don’t appear to be slowing down anytime soon.

Cloud infrastructure giants are driving demand for custom ASICs.

So, is a recovery in the cards for Marvell? With its strong data center segment and promising AI prospects, Marvell is definitely a name to watch, especially after its recent haircut.

AI accelerators are driving growth in the data center segment.