Marvell beats forecasts, shares slip as growth outlook underwhelms

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Aug 27 : Marvell Technology forecast quarterly revenue above estimates on Thursday, but failed to meet lofty investor expectations after a sharp AI-fueled rally in its shares.

The Santa Clara, California-based company's shares fell nearly 3 per cent in extended trading. They have nearly tripled in value so far this year as cloud giants increased spending on AI data centers and custom chips.

Big Tech's push to develop in-house chips that serve as a cheaper alternative to Nvidia's costly and supply-constrained processors has driven demand for Marvell's custom silicon business, making it a big winner of the data-center buildout.

Demand for such chips has also risen as AI use shifts from training models to running them, where custom chips can deliver better performance and efficiency than off-the-shelf processors.

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Marvell expects third-quarter revenue of $3.15 billion, plus or minus 5 per cent, compared with analysts' average estimate of $3.03 billion, according to data compiled by LSEG.

Adjusted profit is expected to be $1.10 per share, plus or minus 5 cents, above estimates of $1.07.

Last week, Marvell struck a custom chip deal with Google that could bring in $120 billion in revenue through fiscal 2033 and make the Alphabet-owned search giant one of its biggest investors with an up to $12.2 billion stake.

The deal is a major strategic victory, diversifying Marvell's custom chip customer base and setting it up to better challenge larger rival Broadcom, which has custom chip deals with OpenAI and has been a key Google partner.

Second-quarter sales rose 37 per cent to $2.74 billion, beating estimates of $2.71 billion, lifted by a 46 per cent rise in data center revenue to $2.17 billion, which also beat estimates of $2.13 billion.

Adjusted profit came in at 94 cents per share, compared with estimates of 92 cents.

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