Marvell Technology (MRVL) posted second-quarter fiscal 2026 results that initially appeared strong.
Revenue rose 58% year over year to $2.006 billion, powered by surging demand in artificial intelligence (AI) infrastructure. Adjusted earnings per share came in at $0.67, matching expectations. The company also notched a record for quarterly revenue, driven primarily by its data center business.
Yet the stock plunged more than 16% after the report, with shares trading around $65. The sharp decline reflects investor disappointment with Marvell’s outlook. Management guided for roughly flat data center sales in the third quarter, despite AI being the company’s largest growth engine.
AI Demand Remains High, but Growth Proves Uneven
Data center revenue surged 69% year over year to $1.49 billion, making up nearly three-quarters of total sales. However, that pace marked a slowdown from the prior quarter’s 76% growth, signaling “lumpiness” in hyperscale AI deployments.
CEO Matt Murphy attributed the deceleration to temporary supply chain adjustments and program transitions rather than weakening demand. He highlighted strong progress in custom silicon and electro-optics products, with Marvell now working on more than 50 AI chip opportunities across 10 major customers.
Still, delays in high-profile contracts with Amazon (AMZN) and Microsoft (MSFT) have created uncertainty. Multi-year deals tied to Amazon’s Trainium series and Microsoft’s Maia platform were expected to drive revenue by fiscal 2026, but rollout timelines may now stretch into fiscal 2027 as cloud providers adjust development schedules.
Data center revenue surged 69% year over year to $1.49 billion, making up nearly three-quarters of total sales. However, that pace marked a slowdown from the prior quarter’s 76% growth, signaling “lumpiness” in hyperscale AI deployments.
CEO Matt Murphy attributed the deceleration to temporary supply chain adjustments and program transitions rather than weakening demand. He highlighted strong progress in custom silicon and electro-optics products, with Marvell now working on more than 50 AI chip opportunities across 10 major customers.
Still, delays in high-profile contracts with Amazon (AMZN) and Microsoft (MSFT) have created uncertainty. Multi-year deals tied to Amazon’s Trainium series and Microsoft’s Maia platform were expected to drive revenue by fiscal 2026, but rollout timelines may now stretch into fiscal 2027 as cloud providers adjust development schedules.
Networking and Carrier Segments Show Strength
Outside of data centers, Marvell delivered strong results in other end markets. Enterprise Networking revenue rose 28% year over year to about $450 million, fueled by upgrades to 800G/1.6T Ethernet switches and hybrid cloud infrastructure. Carrier Infrastructure revenue jumped 71% to approximately $350 million, supported by 5G densification and edge computing demand.
These gains helped offset softness in the company’s custom AI chip revenue, showing Marvell’s broader diversification. Analysts note, however, that the company lacks the scale of larger rivals such as Broadcom, which could weigh on margins as hyperscale customers pursue multi-vendor strategies.
Short-Term Setback, Long-Term AI Potential
Marvell’s record revenue underscores its central role in powering AI infrastructure, but the company’s near-term growth trajectory has disappointed Wall Street. Investors accustomed to consistent “beats” reacted swiftly to flat guidance and uncertainty around flagship contracts.
Still, management reaffirmed expectations for a rebound in the fourth quarter, with stronger custom silicon shipments expected to revive momentum. With analysts’ average price target of $91.73 implying nearly 19% upside from current levels, the selloff may prove temporary—provided Marvell executes on its AI roadmap and customer deployments stabilize.
Marvell’s record revenue underscores its central role in powering AI infrastructure, but the company’s near-term growth trajectory has disappointed Wall Street. Investors accustomed to consistent “beats” reacted swiftly to flat guidance and uncertainty around flagship contracts.
Still, management reaffirmed expectations for a rebound in the fourth quarter, with stronger custom silicon shipments expected to revive momentum. With analysts’ average price target of $91.73 implying nearly 19% upside from current levels, the selloff may prove temporary—provided Marvell executes on its AI roadmap and customer deployments stabilize.
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