MRVL Stock: Will AI Deals Boost the Marvell Technology Share Price?

The Marvell Technology share price has underwhelmed since the start of 2024, despite the company having agreements with major US hyperscalers to help meet the surging demand for artificial intelligence (AI) accelerators. Declines in other segments are weighing on MRVL stock, as is the potential for rivals to encroach on its market.

Marvell Technology [MRVL] is a semiconductor company whose operational headquarters are in the Silicon Valley town of Santa Clara.

In an industry where Nvidia [NVDA] gets most of the attention, Marvell is under the radar. The company develops chips for data centre infrastructure; its customers include Amazon [AMZN] and Alphabet’s [GOOGL] Google.

This spotlight on MRVL stock will discuss how deals with hyperscalers could help to drive future data centre revenue growth.

It’ll also warn that, despite booming AI chip consumption, sales are slumping in non-data centre segments. It would not be good news for the MRVL share price if the AI bubble were to pop.

Hyperscaler Agreements Could Turbocharge MRVL Stock

Back in April, Marvell held an AI-focused analyst day at which it revealed it has ‘custom compute’ deals with three of the four biggest hyperscalers in the US.

It is in the process of making AI training accelerators for what it calls ‘customer A’ and Arm [ARM]-based CPUs for ‘customer B’, while production of an AI accelerator for ‘customer C’ will start ramping in 2026.

Marvell hasn’t disclosed who these customers are, but Needham analyst Quinn Bolton said he believes they are Amazon, Google and Microsoft [MSFT].

Marvell captured 10% of the data centre semiconductor market in 2023 and it is aiming for 20% in the long term, as the market grows from a valuation of $21bn last year to $75bn in 2028.

Custom silicon could be key to ensuring Marvell has the best chance to claim its 20% share. The custom chip market is currently dominated by Broadcom [AVGO].

MRVL Stock Disappoints Despite AI Deals

Despite Marvell’s optimism, AI chip fever hasn’t yet gripped MRVL stock. The Marvell share price is up just 2.9% in the 12 months to 26 July and up 9% since the start of 2024.

Meanwhile, Broadcom’s share price has rallied 65.2% in the past year and is up 35.8% year-to-date.

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How Marvell, Broadcom and Micron’s AI Revenue Compares

Marvell’s most recent quarterly financials give some clue as to why MRVL stock’s performance has underwhelmed.

Better-than-forecast demand for AI products helped its data centre revenue to jump 87% year-over-year to $816.4m in its Q1 2025, which ended 4 May. However, this strength failed to offset weakness elsewhere. Overall revenue slipped 12% to $1.16bn from $1.32bn a year earlier, driven by a 75% slump in carrier infrastructure revenue to $71.8m and a 58% decline in enterprise networking revenue to $153.1m.

For comparison, Broadcom reported a 43% increase in revenue for its Q2 2024, which ended 5 May, with quarterly sales of AI products reaching a record $3.1bn. Micron’s Q3 2024 revenue jumped 82% on robust AI demand; the memory chipmaker believes demand for AI-powered devices will create “a favourable setup that gives us confidence that we can deliver a substantial revenue record in fiscal 2025”.

Here’s how MRVL stock’s financials stack up against those of Broadcom and Micron Technology [MU].

Source: Yahoo Finance

While analysts project that Marvell will see significant growth in its fiscal 2026, a slight decline in overall revenue this year arguably makes the stock overvalued at present — particularly compared with Micron.

MRVL Stock: The Investment Case

Bull Case for MRVL Stock

Marvell is well-placed to benefit from growing demand for AI data centre infrastructure, according to Counterpoint Research.

As the firm pointed out in an analysis published in June, revenue from the deals with the three major hyperscalers will begin to be reflected in quarterly numbers from the end of its current fiscal year and in its fiscal 2026.

Counterpoint argues these hyperscaler agreements should help Marvell to “gain a significant advantage as it will acquire unique insights into their next-generation architectural requirements”.

Bear Case for MRVL Stock

The bad news for Marvell is that Nvidia has decided to enter the custom silicon market. As Reuters reported in February, Nvidia is building a new unit dedicated to designing chips for cloud computing firms that have previously turned to Marvell and Broadcom to fulfil their orders. Nvidia’s customers include Google, Microsoft, Meta [META] and OpenAI.

Given Nvidia’s expertise in AI, its entry into the custom silicon market could potentially be a big threat to Marvell, especially if its AI data centre revenue were to decline and it failed to grow its non-data centre segments substantially.

However, it’s not all doom and gloom. What should hold Marvell in good stead is that it has an established customer base and nearly 30 years’ experience helping its customers to develop their own custom silicon.

Conclusion

Marvell is a leader in custom silicon, but the hyperscalers with which it has deals could easily turn to Nvidia for their future custom silicon needs. There’s also the risk that other chipmakers could join the custom silicon race and eat into Marvell’s hoped-for 20% share of the market.

These risks mean Marvell may need to deliver improvements in non-data centre segments before MRVL stock can be considered a worthwhile, long-term investment.

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