Marvell Technology (MRVL) stock plunged about 15% in Wednesday’s extended trading session despite the chipmaker’s better-than-expected results for the fourth quarter of Fiscal 2025. While the company’s revenue guidance for Q1 FY26 also surpassed the Street’s consensus estimate slightly, investors were unimpressed as they expected significant AI (artificial intelligence) tailwinds to reflect in the outlook. Following the results, Kinngai Chan, a five-star analyst from Summit Redstone Partners, downgraded MRVL stock to Hold from Buy.
Meanwhile, Marvell attributed its Q4 outperformance to its data center end market, which benefited from the demand for its custom AI silicon offerings and solid execution. The company also highlighted that it significantly exceeded its AI revenue target of $1.5 billion in Fiscal 2025 and expects to substantially surpass the $2.5 billion target in Fiscal 2026.
Reasons Behind MRVL Stock’s Rating Downgrade
Chan expects Marvell’s data center end market to continue to drive growth. He also expects the company to gain from port count expansion in the AI server market segment and demand recovery in its traditional core Carrier and Enterprise Networking end markets.
However, the analyst moved to the sidelines on the stock due to increased competition in the custom AI ASIC design market, which could lead to additional gross margin pressure. Chan also noted the lack of financial leverage and lofty expectations of investors.
Chan ranks 667 out of more than 9,400 analysts tracked by TipRanks. He has a success rate of 70%, with an average return per rating of 27.6% over a one-year period.
Other Analysts’ Reactions
Unlike Chan, DBS analyst Fang Boon Foo remains bullish on MRVL stock and reiterated a Buy rating with a price target of $130. Foo believes that Marvell can achieve its long-term strategy through further improvements in its operating and capital structure. He noted that the company is already seeing some level of cost efficiency in its manufacturing and testing operations in Asia Pacific (APAC).
Foo also thinks that Marvell can resolve concerns related to leverage and asset utilization by rightsizing its balance sheet and enhancing operations and cash flows.
Meanwhile, KeyBanc analyst John Vinh reiterated a Buy rating on MRVL stock but slashed the price target to $115 from $135.
Is Marvell a Good Stock to Buy Now?
Wall Street has a Strong Buy consensus rating on Marvell Technology stock based on 22 Buys and two Holds. The average MRVL stock price target of $137.21 implies 52.2% upside potential.
However, more analysts are expected to revise or reaffirm their ratings and price targets in response to the Q4 results and outlook.
