Marvell Technology Inc. (MRVL) shares plunged over 18% on Thursday, marking their steepest drop in more than nine years.
The sell-off was triggered by a revenue forecast that, while in line with analyst estimates, fell short of the highest expectations. The sharp decline in Marvell’s stock price also weighed on other AI-linked semiconductor companies, raising fresh concerns about the sustainability of the AI-driven stock rally.
Nasdaq 100 fell 2.4%, S&P 500 dropped 1.8%, and Dow declined 1.2% following Marvell’s earnings release. The market’s negative reaction highlights the fragility of AI stock valuations amid broader economic and geopolitical uncertainties.
Marvell’s Earnings Beat But Fail to Impress
For the fiscal fourth quarter ending February 1, Marvell reported revenue of $1.82 billion, a 27% year-over-year increase that slightly exceeded analyst expectations of $1.8 billion. Adjusted earnings per share (EPS) came in at $0.60, edging past Wall Street’s forecast of $0.59.
The company’s data center business—accounting for 75% of total revenue—was the primary driver, surging 78% year-over-year to $1.37 billion. However, this segment’s guidance for the next quarter was muted, with Marvell forecasting mid-single-digit sequential growth. Meanwhile, other business segments saw steep declines: carrier infrastructure revenue fell 38%, consumer revenue dropped 39%, and enterprise networking declined by over 35% year-over-year.
Marvell’s first-quarter revenue outlook of $1.875 billion was within the expected range but failed to deliver a bullish surprise. The company projected adjusted EPS between $0.56 and $0.66, with analysts forecasting $0.60. Despite securing new design wins and ramping up custom AI silicon programs, investors were disappointed by the tepid growth projections.
AI Optimism Faces Market Skepticism
The sharp decline in Marvell’s stock reflects growing investor concerns about the durability of the AI-driven semiconductor boom. While demand for AI chips remains strong, analysts are questioning whether the growth trajectory can justify the sky-high valuations of AI-related stocks.
“Investors were already very skittish about AI names in recent weeks,” noted Stifel analyst Tore Svanberg. “Marvell’s report probably doesn’t help calm those nerves.”
The broader semiconductor sector also felt the impact. The iShares Semiconductor ETF (SOXX) fell 3.8% in premarket trading, while Nvidia (NVDA) and Broadcom (AVGO) declined 4.7% and 5.6%, respectively. The sell-off underscores fears that AI infrastructure spending may slow as major tech firms reassess their capital expenditures.
What’s Next for Marvell and the AI Sector?
Despite the setback, Marvell remains a key player in the AI and data center space, with strong relationships with major hyperscalers like Amazon (AMZN) Web Services. CEO Matt Murphy emphasized the company’s long-term growth potential, citing continued AI-driven demand and upcoming product launches.
However, investors are recalibrating expectations. The AI semiconductor market has seen rapid growth, but with increased competition and potential spending slowdowns from major cloud providers, companies like Marvell must prove they can sustain momentum beyond initial AI hype cycles.
The coming months will be critical for Marvell and the broader AI chip industry. If data center and AI-driven revenues continue to underwhelm, semiconductor stocks may face further downward pressure. On the other hand, any upside surprises in AI infrastructure investment could help restore confidence in Marvell’s long-term growth prospects.
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