Shares of Marvell technology(NASDAQ:MRVL) rose 23.2% on Wednesday following the data infrastructure semiconductor specialist’s publication the afternoon before of its report for the third quarter of its fiscal year 2025 (ending November 2, 2024).
The positive reaction from investors can be attributed to the fact that revenue and earnings for the quarter exceeded Wall Street consensus expectations, and that fourth-quarter expectations for both top and bottom line results outpaced analyst expectations.
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Strong demand for artificial intelligence (AI) capabilities drove Marvell’s quarterly growth and better-than-expected guidance.
Metric
Fiscal third quarter 2024
Fiscal third quarter 2025
Change YOJ
Gain
$1.42 billion
$1.52 billion
7%
GAAP operating income
($146.3 million)
($702.8 million)
Loss increases 380%
GAAP net income
($164.3 million)
($676.3 million)
Loss greater 312%
Adjusted net profit
$354.1 million
$3730.0 million
5%
GAAP earnings per share (EPS)
($0.19)
($0.78)
Loss greater 311%
Custom EPS
$0.41
$0.43
5%
Data source: Marvell Technology. YOY = year after year. GAAP = generally accepted accounting principles. The third fiscal quarter of 2025 ended on November 2, 2024.
Investors should focus mainly on the adjusted figures, which exclude one-off items. Adjusted net income excludes $715.1 million in restructuring charges, $264.9 in amortization of acquired intangibles, $158.4 million in stock-based compensation, and a few other smaller positive and negative items.
Wall Street was looking for adjusted earnings per share of $0.40 on revenue of $1.45 billion, so Marvell exceeded both expectations.
In the quarter, Marvell generated cash of $536.3 million for its operations, up 7% from the same period last year. The company ended the quarter with cash and equivalents of $868.1 million, up 7% from the previous quarter, and long-term debt of $3.97 billion on the balance sheet.
End of market
Fiscal turnover Q3 2025
Change YOJ
Data center
$1.10 billion
98%
Enterprise networks
$150.9 million
(44%)
Carrier infrastructure
$84.7 million
(73%)
Consumer
$96.5 million
(43%)
Automotive/industrial
$82.9 million
(22%)
Total
$1.52 billion
7%
Data source: Marvell Technology. YOY = year after year.
The phenomenal 98% year-over-year growth in the data center end market was driven by strong demand for the company’s AI-related products. These mainly include the custom AI chips – application-specific integrated circuits (ASICs) – and interconnect products for AI-enabled data centers.
In the third fiscal quarter, the data center end market accounted for a whopping 72% of Marvell’s total revenue. This is an increase from just 39% in the previous year’s quarter, clearly demonstrating how the company’s business profile has changed significantly in just one year.
The other four end markets continued to struggle year after year, dragging down the company’s overall results. This is a phenomenon in the semiconductor industry and not specific to Marvell.
In the earnings release, CEO Matt Murphy commented on the quarterly results and fourth quarter outlook:
Marvell’s fiscal third quarter 2025 revenue grew 19% sequentially, well above the midpoint of our expectations, driven by strong AI demand. For the fourth quarter, we forecast another 19% sequential revenue growth at the midpoint of expectations, while year-over-year we expect revenue growth to accelerate significantly to 26%, marking the start of a new era of growth for Marvell.
Additionally, in addition to expecting a “strong finish to this fiscal year,” Murphy said management will continue “substantial momentum into fiscal 2026.”
For the fourth fiscal quarter (ending in late January/early February 2025), management expects:
Sales of $1.80 billion, representing 26% year-on-year growth.
Adjusted earnings per share are between $0.54 and $0.64, representing growth of 17% to 39% (28% at the midpoint).
At the time of publication, Wall Street expected fourth-quarter adjusted earnings per share of $0.52 on revenue of $1.65 billion, so Marvell’s outlook exceeded both expectations.
Marvell’s overall third-quarter results were similar, with year-over-year revenue and adjusted earnings per share rising only a modest 7% and 5%, respectively.
But the outlook for the fourth quarter looks great, with expected revenue growth of 26% year over year and adjusted earnings per share growth of 17% to 39%. This robust outlook reflects management’s confidence that strength in the AI-powered data center end market will continue and demand will improve in some of its other markets.
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Beth McKenna has no positions in any of the stocks mentioned. The Motley Fool recommends Marvell technology. The Motley Fool has a disclosure policy.
Marvell Stock Surges 23% as Strong Demand for Custom Artificial Intelligence (AI) Chips Boosts Third-Quarter Results and Beats Expectations, originally published by The Motley Fool
