Chip maker Marvell Technology (MRVL) posted better-than-expected revenue in the fiscal second quarter, driven by strong demand for its custom chips for artificial intelligence applications. MRVL shares rose on Friday on the news.
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On Thursday evening, Marvell reported adjusted earnings of 30 cents a share on revenue of $1.27 billion in its fiscal second quarter ended Aug. 3. Analysts polled by FactSet had expected earnings of 30 cents a share on revenue of $1.25 billion.
But on a year-over-year basis, Marvell’s revenue fell 9%, while sales fell 5%. Marvell’s Q2 report marked the second straight quarter of declining sales and profits.
For the current quarter, the Santa Clara, Calif.-based company expects adjusted earnings of 40 cents per share on revenue of $1.45 billion. That’s based on the midpoint of its forecast. Wall Street was modeling earnings of 38 cents per share on revenue of $1.41 billion in the fiscal third quarter. In the year-ago quarter, Marvell earned an adjusted 41 cents per share on revenue of $1.42 billion.
Today, MRVL stock rose 9.2% on the stock market to close at 76.24.
MRVL Stock: AI Chips Are a Bright Spot
“Marvell’s second quarter revenue grew 10% sequentially, above the midpoint of guidance, driven by strong demand for AI,” Chief Executive Matt Murphy said in a press release. “We saw strong growth in our electro-optic products and our custom AI programs began to ramp up.”
He added: “Next quarter, we expect our combined enterprise networking and carrier end markets to return to growth, while our data center end market growth will accelerate.”
Marvell makes custom AI chips for Alphabet‘s (GOOGL) Google, Amazon (AMZN) and Microsoft (MSFT).
Marvell shares get flood of price target hikes
At least six Wall Street firms raised their price targets for MRVL shares following Marvell’s second-quarter report.
Marvell is “firing at full speed,” Barclays analyst Tom O’Malley said in a client note, reiterating his overweight rating on MRVL shares and raising his price target to 85 from 80.
“In particular, management noted that AI revenue will significantly exceed the guidance set earlier this year of $1.5 billion in total by fiscal year 2025. The company also expects multi-quarter growth trajectories for enterprises and carriers, which have been experiencing significant inventory adjustments since last year,” O’Malley said.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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