The artificial-intelligence frenzy is powering another technology stock rally.
Marvell
Technology is the latest chip maker to join
Nvidia
in surging as it forecasts AI to be a long-term growth driver.
Marvell (ticker: MRVL) stock rose 18.5% in premarket trading on Friday to $58.62. While its first-quarter earnings narrowly beat analysts’ expectations on Thursday, the real excitement was about the semiconductor firm’s AI prospects.
“Despite recent cyclical headwinds, we believe MRVL remains one of the few semi companies to offer meaningful secular growth potential across a wide array of products/end markets (including AI),” analysts at Deutsche Bank wrote in a research note on Friday.
They raised their target price on the stock to $65 from $50 and maintained a Buy rating on the shares.
For those skeptical of an AI bubble, Marvell at least can say it is already making money from the technology. The company, which makes networking chips used in data centers, said it generated AI revenue of $200 million in its most recent fiscal year, out of total revenue of $5.92 billion.
Marvell expects AI-related revenue to double to around $400 million in its current fiscal year and rise to $800 million in its next fiscal year.
CEO Matt Murphy told analysts on an earnings call that the speed of AI development meant the related infrastructure needed to be refreshed every 18-to-24 months versus more than four years for standard data centers.
“Increasing demand for generative AI is driving MRVL’s network connectivity products and cloud-optimized silicon platform,” analysts at KeyBanc wrote in a research note on Friday.
KeyBanc raised its target price on Marvell to $70 from $60 and kept a rating of Overweight on the stock.
Write to Adam Clark at adam.clark@barrons.com
Read the full article here
