Marvell Technology (MRVL) surged nearly 9% this week, fueled by bullish sentiment following its custom AI silicon event and expanded long-term growth projections.
The chipmaker raised its 2028 data center market forecast to $94 billion, signaling an aggressive push into custom silicon and AI infrastructure—a strategy that appears to be resonating with Wall Street and hyperscaler partners alike.
Marvell Expands AI Horizons with $94 Billion Market Target
At the heart of Marvell’s bullish roadmap is a projected total addressable market (TAM) of $94 billion for its data center business by 2028, a 26% boost from prior estimates. Custom accelerated computing will drive the lion’s share, expected to hit $55.4 billion—$40.8 billion from custom XPUs and $14.6 billion from XPU attach.
That growth hinges on expanding relationships with cloud powerhouses like Amazon (AMZN), Microsoft (MSFT), and Google (GOOG). The company recently announced it added two new XPU clients, bringing its custom silicon customer base to 18. UBS noted this was a key point of reassurance for investors worried about long-term visibility.
Despite some cautious analyst takes, including Morgan Stanley’s skepticism around Marvell’s ability to sustain a 50% compound annual growth rate in AI, most firms remain optimistic. UBS, Benchmark, Stifel, and Loop Capital all reiterated Buy ratings, with price targets ranging from $80 to $100. Rosenblatt went further, setting a $124 target, citing Marvell’s deep technology pipeline and growing strategic relevance.
Custom Chips, Cloud Giants Drive New Phase of Growth
Marvell’s progress is not only theoretical. Its first fiscal quarter results underscored robust momentum: revenue hit $1.895 billion, up 63% year-over-year, with data center sales soaring 76% to a record $1.44 billion. Adjusted earnings per share jumped 158% to $0.62, bolstered by strong AI-driven demand.
The company also guided for a second-quarter revenue record of $2 billion, marking 57% year-over-year growth. Gross margins and earnings are expected to remain strong, despite some pressure from lower-margin custom silicon offerings.
Marvell is also refining its business mix. It recently sold its automotive Ethernet unit to Infineon for $2.5 billion, enabling greater focus on core cloud and AI infrastructure segments. This pivot aligns with a broader trend toward specialization in high-performance custom chips tailored for hyperscale computing.
From Silicon to Power: Strategic Shifts Position Marvell for 2028 Boom
Complementing its chip strategy, Marvell announced a new collaboration with Empower Semiconductor to co-develop integrated power delivery solutions. These "under-the-hood" technologies are essential for next-generation AI chips, particularly in data centers consuming more than 4 kilowatts per processor.
Empower’s FinFast™ technology will enable voltage regulation directly at the chip level, reducing power loss, boosting performance, and enabling higher density in AI compute clusters. These advancements support Marvell’s custom silicon strategy by enhancing chip efficiency and minimizing thermal constraints—a major hurdle in data center design.
Further enhancing its tech stack, Marvell also unveiled a 2-nanometer custom SRAM, delivering up to 6 gigabits of high-speed memory while slashing power usage by up to 66%. With AI systems demanding faster, more efficient on-chip memory, this innovation could become a key differentiator.
Conclusion
Marvell Technology is carving out a strong position in the evolving AI infrastructure landscape. By aligning its roadmap with the needs of cloud giants and expanding its technology portfolio—from custom silicon to integrated power delivery—it’s laying the groundwork for a $94 billion market opportunity by 2028. Despite some near-term skepticism on execution, Wall Street appears to be warming to Marvell’s long-term trajectory. For investors eyeing AI infrastructure, Marvell is emerging as a key name to watch.
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