Experienced investors will know by now that a company’s share price rarely tells the full story. In the case of Marvell Technology (MRVL), the exciting world of data centres and AI is far different from the company’s market performance, with shares down 50% in 2025.
Many will argue that the company is a key player in enabling AI infrastructure, but with the share price seemingly struggling, I suspect there may be some decent opportunities ahead for patient investors. While nothing in the world of AI and investing is simple these days, I’m taking a bullish stance on this one, albeit with the expectation of a few more bumps along the way.
Marvell’s Data Pivot Continues to Deliver
Many investors will remember when Marvell focused entirely on storage controllers and ethernet products, but that seems to have ended. As many other firms have done, management has gone all in on the AI revolution, making waves in custom silicon and high-speed optical networks. This has been a fairly gradual journey, with many acquisitions and rethinks along the way, but a quick look at the numbers suggests it seems to be working.
In FY25, the company posted impressive revenues of $5.8 billion, with data centre revenue soaring 88% in the last year. What makes this even more exciting for investors is that this sector has moved from 33% of revenues to a mighty 75%. Some may note this could be a dangerous dependence on a single area, but most would agree that AI demand will likely be consistent and growing for some time to come.
While a delicate balance, I see management doing well to find the strategy to put the firm at the centre of the hardware needed to train and develop these generative models, all while ensuring there is still room to manoeuvre as the sector continues to evolve.
Marvell’s Niche Superpower
Investors looking to invest in AI hardware will, of course, be considering Nvidia (NVDA), the clear titan of the GPU space, but I think Marvell has done well to carve out a valuable and growing niche within custom AI accelerators and optical interconnects. These are clearly specialist components, but are essential in delivering the speed and scalability needed for AI clusters.
As you might expect, the latest earnings report indicated outperforming AI-specific revenue, which blew past annual estimates at $1.5 billion. This is now expected to exceed $2.5 billion in 2026. While some will suggest that every company working in AI is doing well in the current environment, this kind of specialist technology doesn’t come without years of expertise and development. This represents a moat of sorts, which could be very challenging to disrupt.
One of the major revenue drivers is a recent multi-year deal with Amazon’s AWS, supplying optical DSPa, switching silicon, and an impressive new XPU program. Where most discussion in the sector seems to relate to the quantity of chips and not much else, I see this deal as more of a structured partnership to provide the exact architecture AWS is looking for, not just building out processing capacity.
Near-Term Concerns for MRVL Stock
Despite my bullishness on the numbers, the market has clearly punished the stock for several near-term worries. With an uncertain economic picture, many cloud providers have cut spending, and growing reliance on data centres for revenues suggests that other areas may be weaker than expected.
This absolutely plays out in the guidance, with consumer revenue expected to drop by 35% in Q1 2026. I expect strength in data centres to offset much of this, but any level of uncertainty is likely to spook investors.
Management does not seem to be flinching through this tricky moment, with the robust balance sheet paying nearly $1 billion in dividends and buybacks. With about $1.6 billion in cash and next to no debt, there is plenty of flexibility available, but whether it can compete with some of the hardware giants with far greater resources remains to be seen.
Some of this fear is likely behind the struggles in the share price, but with a discounted cash flow (DCF) putting fair value somewhere around the $50 level, I suspect a lot of the negativity may now be priced in. While there are bound to be further bumps for management to handle, part of the strategy for long-term investors is determining when the risk/reward balance tips back in their favour. I see a strong pipeline of work, a specialist niche in a growing area, and fair valuation as promising indicators that things are moving in the right direction.
Is Marvell Technology a Buy, Sell, or Hold?
On Wall Street, MRVL stock carries a Strong Buy consensus rating based on 28 Buy, two Hold, and zero Sell ratings over the past three months. MRVL’s average price target of $107.33 implies almost 97% upside potential over the next twelve months.
What is Marvell Doing?
Clearly, there is somewhat of a disconnect between the share price trend and the potential. However, I think the AWS deal lends a lot of credibility to the vision set out by Marvell’s management team. While many companies are increasingly looking to develop their own software and hardware, Marvell may have enough of a specialism in areas such as custom AI inference chips that these companies simply cannot compete with.
Much of the recent decline is attributed to wider economic volatility. Where the share price soared in the last few years, it has come back down to earth at a similar pace. While there is plenty of truth to the concern around cyclicality and general spending, Marvell has a solid pipeline of work ahead. Such partnerships and architectures are sticky once in place, often leading to lasting relationships far beyond initial deals.
I like management’s efforts to streamline the business lately, too. The sale of legacy parts of the business to Infineon for $2.5 billion shows a clear intent to move away from Ethernet and into higher-margin infrastructure. Investors want to see this kind of clarity and appetite to capitalize on market opportunities.
Marveling at the AI Boom
While the world of AI is as dynamic and uncertain as ever, Marvell has a compelling niche within it. The strategy is clear, trends are moving in the right direction, and while the share price is far from where investors want it, it could be a great bullish opportunity.
Despite first impressions, MRVL is not a speculative company. However, it is intriguing how it moves from a history of networking chips to the next level of AI computing. I see plenty of reasons for caution, but I think there could be opportunities for investors with the right approach to risk at the current price.