Marvell (MRVL) reported its Q4 earnings on March 5. The stock closed 18.35% higher at $89.57 on the next day, according to Yahoo Finance.
The stock soared thanks to the strength of the report, but also because it proved that the rumors about the company losing its key customers were not true. I wrote about how the stock lost a lot of value thanks to these rumors in my article “5-star analyst resets Marvell forecast before earnings.”
Investors interested in Marvell are probably also interested in how Broadcom, its main competitor, is doing. I covered Broadcom’s earnings in my article “Morgan Stanley resets Broadcom price target after earnings.”
Marvell Q4 earnings highlights:
- Record net revenue of $2.219 billion, a 22% year-over-year increase
- GAAP gross margin of 51.7%
- GAAP diluted income per share $0.46
Important products in Marvell’s vast tech portfolio are Data Center Interconnect (DCI) Modules, which are used to transmit data over regional fiber networks.
“We are winning new customers and expect to supply DCI modules to all five major U.S. hyperscalers this year,” Marvell Chairman and CEO Matt Murphy said during the earnings call, describing the company’s progress.
“We see significant long-term growth in this market as the global data center footprint expands and bandwidth requirements between data centers continue to increase,” Murphy added.
“Industry forecasts project the DCI pluggable [total addressable market] to grow by more than 5x by calendar 2030, with speeds doubling each generation and feature complexity increasing, including the integration of [Media Access Control Security (MACsec)].”
Marvell outlook for Q1 fiscal 2027:
- Net revenue of $2.4 billion +/- 5%
- GAAP gross margin in the range of 51.4% to 52.4%
- GAAP diluted net income per share of $0.31 +/- $0.05 per share
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Goldman Sachs raises Marvell price target
Following the report’s release, Goldman Sachs analyst James Schneider and his team updated their view on Marvell stock.
The analysts said they see Marvell’s results as an incremental medium-term positive for the stock, given increased visibility into medium-term fundamentals.
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They noted that the company expects some level of gross margin dilution due to its custom silicon product mix. The team estimates that the company will see approximately 0.25% quarter-over-quarter (QoQ) gross margin erosion through calendar year 2026, and approximately 0.5% QoQ erosion in calendar year 2027.
Analysts raised their EPS estimates for 2026-2028 EPS by an average of 16%, driven by higher revenues and partially offset by lower gross margin assumptions.
EPS estimates (excluding stock-based compensation):
|
Year |
2026 |
2027 |
2028 |
|
New EPS estimate |
$3.8 |
$5.25 |
$7.0 |
|
Old EPS estimate |
$3.4 |
$4.5 |
$5.85 |
In a research note shared with me, Schneider reiterated a neutral rating for Marvell stock and increased the target price to $100 from $90.
Analysts noted downside risks for Marvell:
- Slowdown in overall AI spending
- Share loss in custom compute
Upside risks:
- Stronger-than-expected ramp in custom compute
- Stronger-than-expected recovery in traditional businesses
Marvell improves its DCI technology
The forecast Murphy provided during the DCI earnings call also unveiled impressive improvements for the tech.
The company expanded its multi-generational ZR/ZR+ and coherent digital signal processor (DSP) technology portfolio. It launched COLORZ 1600, the industry’s first 1.6 Tbps ZR/ZR+ DCI pluggable and 2nm coherent DSPs featuring MACsec.
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COLORZ 1600, with the Electra coherent DSP, enables connecting campus (20km), metro (120km), and regional (1,000km) data centers at 1.6 Tbps.
“Marvell, in close collaboration with hyperscale customers, introduced the first ZR pluggable nearly a decade ago and has continued to set the pace for every generation of coherent technology,” said Russ Esmacher, senior vice president and general manager, Data Center Interconnect at Marvell.
“Marvell has a proven track record of consistently delivering first-to-market advancements across multiple generations of coherent DSPs, and the company’s move to 2nm solutions underscores its commitment to density, performance, and power,” added Cignal AI Lead Analyst Scott Wilkinson.
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