Shares of Marvell jump sky-high as it forecasts AI chip revenue to double

Shares of Marvell jump sky-high as it forecasts AI chip revenue to double

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Marvell Technology Inc. topped expectations in its first quarter financial results today and said it’s expecting revenue from artificial intelligence to at least double this year, sending its stock sky-high in extended trading.

The company reported a net loss for the first quarter of $168.9 million, with earnings before certain costs such as stock compensation coming to 31 cents per share, beating the analyst consensus estimate of 29 cents. Revenue for the period declined 9% to $1.32 billion, but still came in ahead of the $1.3 billion analyst forecast.

Marvell designs and sells a variety of data storage and networking chips that are primarily sold to cloud computing providers and companies in the automotive and communications industries. It’s a much smaller player in the computer chip business than the likes of Intel Corp. and Nvidia Corp., but it has a strong presence and is growing fast in the primary segments in which it operates. It’s also rapidly emerging as a player in the market for AI chips.

In a statement, Marvell President and Chief Executive Matt Murphy (pictured) said the company expects its revenue growth to accelerate in the second half of its fiscal year. “AI has emerged as a key growth driver for Marvell, which we are enabling with our leading network connectivity products and emerging cloud-optimized silicon platform,” he said. “While we are still in the early stages of our AI ramp, we are forecasting our AI revenue in fiscal 2024 to at least double from the prior year and continue to grow rapidly in the coming years.”

Marvell executives subsequently issued a confident forecast, saying they expect second quarter revenue of approximately $1.33 billion at the midpoint, ahead of Wall Street’s consensus of $1.31 billion. The company also forecast adjusted earnings of 32 cents per share, versus Wall Street’s target of 30 cents.

In addition, Marvell said it sees a GAAP gross margin of 44.3% to 46.8% in the current quarter, with a non-GAAP gross margin of between 60% and 61%.

Murphy said he also expects to see “operating margin expansion” in the current quarter.

Marvell’s stock had gained almost 8% in Thursday’s regular trading session, fueled by upbeat comments from Nvidia Corp. executives on the state of spending on AI chips. It then roared to an impressive 16% in extended trading in the wake of today’s report.

Photo: Marvell Technology

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