Story Stocks^®

Fueled by robust demand for its custom AI chips and some strengthening in its non-data center markets, Marvell (MRVL) turned in a marvelous beat-and-raise Q3 earnings report that has shares rocketing higher. In fact, the company's impressive results and bullish outlook, which prompted CEO Matthew Murphy to declare that MRVL is now entering a "new era of growth", is providing a lift to several other semiconductor stocks such as Broadcom (AVGO), Qualcomm (QCOM), and NVIDIA (NVDA). 

• Prior to this quarter, MRVL's revenue had declined on a yr/yr basis in five of the past six quarters with the only growth being a miniscule 0.6% increase in 4Q24 (reported on 3/7/24). In addition to high interest rates and persistent inflationary pressures, a glut of inventory across MRVL's Consumer, Automotive, and Carrier and Enterprise end markets had weighed on demand. However, in 3Q25, revenue growth accelerated to nearly 7% and the midpoint of MRVL's Q4 revenue guidance of $1.71-$1.89 bln equates to much stronger yr/yr growth of 25%.
• Not only have those inventory-related headwinds abated, but MRVL is also experiencing explosive growth in its data center market. After surging by 92% last quarter, Data Center revenue nearly doubled yr/yr to a record $1.10 bln, accounting for 73% of total revenue compared to about 40% in the year-earlier quarter. Like last quarter, MRVL saw robust demand from cloud hyperscalers such as Amazon Web Services (AMZN), Google (GOOG), and Microsoft (MSFT) for its custom AI chips that help run large language models and AI programs.
• There's no slowdown in sight, either, for Data Center with MRVL forecasting low-to-mid 20% sequential growth for Q4, driven by the ramp-up of its four custom AI chips: Trainium, Axion, Inferentia, and Maia-2. MRVL's AI chips have also become an alternative to NVDA's pricey GPUs.
• Meanwhile, revenue for non-data center products fell by 51% yr/yr to $415 mln, but the arrow is pointing higher across each of MRVL's end markets. For instance, in Enterprise Networking and Carrier, combined revenue grew by 4% sequentially and MRVL expects the pace of recovery to accelerate in Q4, forecasting mid-teens growth on a sequential basis.
• For both the Consumer and Automotive/Industrial end markets, revenue edged higher by 9% qtr/qtr with low-to-mid-single digit growth expected in Q4 for auto. Due to seasonality factors in gaming, MRVL anticipates Consumer to decline by a mid-teens rate on a qtr/qtr basis, before strengthening again in Q2.

The main takeaway is that MRVL is making a strong case that it deserves to be included in the conversation when it comes to top AI plays in the semiconductor space, alongside NVDA and AMD. Demand for its custom AI silicon is skyrocketing, and the company believes that it's only in the early innings of its growth curve as it targets $2.5 bln in AI network and custom processor chip revenue next year.