Marvell Technology (MRVL:NSD) experienced a significant surge in its stock price, soaring nearly 17% during extended trading on Thursday. The chip company’s remarkable fiscal first-quarter results and promising outlook contributed to the market’s positive response. Notably, Marvell expects its artificial intelligence (AI) revenue to double, at the very least, in the current fiscal year. The positive momentum in semiconductor stocks was further bolstered by larger rival Nvidia’s (NVDA:NSD) comments about robust demand for AI chips.

First Quarter Earnings Review:

In the first quarter of Fiscal 2024, ending on April 29, 2023, Marvell reported a 9% year-over-year decline in revenue, amounting to $1.32 billion. This decrease was primarily attributed to a drop in data center revenue resulting from a decline in the storage business. The company’s consumer-end market revenue also experienced a decline, impacting the overall top line. Despite these challenges, Marvell managed to surpass analysts’ expectations for both revenue and adjusted earnings per share (EPS), which came in at $1.30 billion and $0.29, respectively. Adjusted EPS witnessed a 40% plunge due to lower revenue and higher expenses.

Impressive Demand for AI Marvell foresees sequential revenue growth in the fiscal second quarter, with the resumption of growth in data center storage revenue. Furthermore, the company expects cloud revenue to grow over 10% sequentially in Q2 FY24. Overall, Marvell projects Q2 FY24 revenue in the range of $1.33 billion, with a margin of error of 5%. The anticipated adjusted EPS is $0.32, with a margin of error of $0.05. The midpoint of Marvell’s Q2 FY24 revenue and EPS guidance surpassed Wall Street’s estimates of $1.31 billion and $0.30, respectively.

Looking ahead, Marvell Technology stock forecast envisions accelerated sequential revenue growth in the second half of FY24. The company anticipates its AI revenue in full-year FY24 to at least double compared to the previous fiscal year, reaching a compound annual growth rate (CAGR) of over 100% from FY23 to FY25. Marvell’s President and CEO, Matt Murphy, emphasized the importance of AI as a key growth driver for the company, highlighting the role of Marvell’s leading network connectivity products and emerging cloud-optimized silicon platform.

Is Marvell a Solid Stock Investment?

Following the release of the Q1 results, Rosenblatt Securities analyst Hans Mosesmann acknowledged Marvell’s slight beat relative to expectations. Mosesmann noted that cloud and AI-related projects, such as PAM4, ASICs, and switching, demonstrated strong performance alongside improvements in non-AI areas that are still dealing with inventory drawdowns. Mosesmann reasserted a Buy rating on MRVL stock, with a price target of 0. (https://thereader.com/)

The strong consensus analyst rating of Wall Street analysts stands at Strong Buy, based on 23 Buy ratings and two Holds. The average price target for Marvell is $57.30, implying an upside potential of 15.8%.

Marvell’s exceptional first-quarter market performance, coupled with its optimistic AI-driven future, has undoubtedly captured the attention of investors. The company’s ability to navigate challenges and capitalize on the growth potential of AI positions it favorably in the market. As the story continues to unfold, investors will closely monitor Marvell’s progress and potential for long-term success.