Marvell shares plunge as data center outlook raises AI chip concerns
Marvell Technology shares fell 15% in premarket trading on Friday after the chipmaker’s outlook for data center demand disappointed investors, fueling concerns over uneven sales of its custom AI chips to major cloud providers.
CEO Matt Murphy said on Thursday’s earnings call that Marvell’s data center revenue would remain “sequentially flat” in the third quarter. The guidance rattled investors who were betting on stronger growth in the company’s key segment, which powers artificial intelligence infrastructure, News.Az reports, citing Reuters.
Marvell’s revenue is increasingly tied to its custom chip business, serving cloud giants such as Amazon and Microsoft. Both companies are investing heavily in in-house semiconductor development to reduce reliance on Nvidia, raising uncertainty about long-term demand for Marvell’s solutions.
A recent report suggested Microsoft may delay the rollout of its in-house AI chips until 2028 or later. Murphy noted that “lumpiness” in orders is normal due to uneven infrastructure spending cycles by hyperscale customers.
Analysts warned that Marvell’s smaller scale compared to rivals could be a disadvantage. “Marvell lacks scale relative to larger peers and expects hyperscale customers to pursue a multi-vendor sourcing strategy, which could weigh on margins,” said Summit Insights analyst Kinngai Chan, who maintains a “hold” rating.
Marvell competes with Broadcom in the custom chip and networking space. Broadcom has yet to release its July-quarter results, but its shares have outperformed Marvell this year.
If premarket losses persist, Marvell is on track to shed nearly $10 billion in market value. The stock trades at a 12-month forward price-to-earnings ratio of 23.95, compared with Broadcom’s 39.03, according to LSEG data.
Despite Friday’s selloff, Marvell expects stronger performance in the fourth quarter, projecting an uptick in custom chip orders later in the year.
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