Semiconductor player Marvell Technology’s (MRVL) Chairman and CEO Matt Murphy shared some optimistic insights into the company’s potential growth roadmap. Goldman Sachs analyst Toshiya Hari summarised key takeaways from the CEO’s presentation at the bank’s Communacopia and Technology Conference held this week.
Following the conference, Hari reiterated a Buy rating on MRVL stock with a price target of $87, which implies 17.1% upside potential from current levels. Hari is a five-star analyst on TipRanks, boasting an average return per rating of 24.1% and a success rate of 63%.
Murphy’s Optimistic View of MRVL’s Future
Let’s take a quick look at the important takeaways from the CEO’s statements.
- AI Revenue Exceeds Expectations – Murphy noted that the company is witnessing solid demand for its AI (artificial intelligence) business, which includes sales of products like custom compute and electro-optics. He expects the AI business to exceed the company’s guidance of reaching $1.5 billion and $2.5 billion in FY25 and FY26, respectively.
- Higher Share in Custom Compute – Marvell aims to achieve a market share of roughly 20% in the accelerated custom compute business by 2028. This translates into revenues of high single-digit billions of dollars, which also compares favorably with Goldman’s 2026 estimated revenue of $1.9 billion. Murphy stated that this goal will be achieved by targeting customers having mission-critical projects.
- Scaling Interconnect Tech – Marvell acknowledges the growing demand for Linear Receive Optics (LRO) and Co-Packaged Optics (CPO) and continues to invest in them to have a complete portfolio in Connectivity. Having said that, Murphy believes that pluggable devices will command a major share in the short term. Marvell already has a big share in the pluggables market.
- Challenges in Storage – Murphy noted that the Storage business has been slowly recovering over the past six quarters. He added that customer demand was increasing and this would help Storage revenues to normalize to a $200 million per quarter run rate in FY26.
- Recovery in Enterprise Network and Carrier – Commenting on the recovery in Enterprise Networking and Carrier infrastructure segments, Murphy noted that they are expected to grow in mid-single-digits in Q3 (QoQ) and deliver accelerated sequential growth in Q4. This will be possible as higher customer demand clears the inventory and improves order trends.
- Challenges to Margin – Murphy said that owing to the uncertainties involving cyclical recovery in traditional merchant business and the rate of growth in the custom compute business, MRVL’s gross margin is expected to remain around 61% for the next few quarters. Marvell is instead focused on improving its operating margin to 38%-40%, as the company has more control over operating expenses.
Overall, Murphy is optimistic about Marvell Technology’s future growth, backed by recovering demand and investments in advanced AI technology.
Is Marvell a Good Stock to Buy?
Wall Street is highly bullish on this AI play. On TipRanks, MRVL stock has a Strong Buy consensus rating based on 22 Buys versus one Hold rating. The average Marvell Technology price target of $93.71 implies 26.1% upside potential from current levels. Year-to-date, MRVL shares have gained 23.6%.
