Marvell
Technology shares were dropping Friday as investors reacted with disappointment to the lack of a beat-and-raise from the semiconductor company. Analysts are still backing the stock on the growth of artificial intelligence.
Marvell
(ticker: MRVL) stock was down 4.5% in premarket trading at $54.70, adding to losses on Thursday. It looks to have been caught up in a rotation out of technology stocks despite Marvell’s earnings and guidance largely matching expectations.
Wall Street analysts still think Marvell –which designs data storage and networking chips– is doing a good job.
“MRVL’s growth story remains in early innings, led by cloud AI, 5G, and auto. We remain long-term buyers,”
Oppenheimer’s
Rick Schafer wrote in a research note.
Schafer kept an Outperform rating and $70 target price on the stock.
Marvell stock was boosted earlier this year when it said it expected AI-related revenue to be around $400 million in its current fiscal year and double again the next fiscal year.
Marvell executives said on an earnings call that they now expect AI-related revenue growth to be stronger than previously predicted, hitting $200 million for the fourth quarter alone and accelerating from there. However, they said expectations for a data-center storage recovery have been delayed.
KeyBanc’s John Vinh said the guidance suggests Marvell could generate more than $500 million in AI-related revenue in its current fiscal year and $1 billion in the subsequent year. He kept an Overweight rating and $80 target price on the stock.
Marvell’s fall and the volatile stock moves after
Nvidia
‘s (NVDA) earnings beat suggests investors are beginning to put in a higher bar for stocks that have risen based on AI excitement. Marvell shares were up 55% this year as of Thursday’s close.
However, Tejas Dessai, a research analyst at exchange-traded fund provider Global X, said Marvell is a long-term play on the broadening of AI spending beyond Nvidia.
“We think the low-power, low-price chip providers like
Qualcomm,
Broadcom,
Marvell, and others… are extremely well positioned to benefit from the looming shift [in AI spending],” said Dessai.
Write to Adam Clark at [email protected]
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