Marvell's AI Boom: Growth Soars, Stock Falls

Marvell Technology reported a record fiscal second quarter with revenue reaching $2.739 billion, a 37% increase year-over-year. The company's data center business was a primary driver, generating $2.17 billion in revenue, up 46% from the previous year, fueled by robust AI infrastructure demand. Management raised the full-year fiscal 2027 revenue outlook to approximately $12 billion and the fiscal 2028 target to about $18 billion.

Despite beating earnings and revenue estimates, Marvell's stock fell sharply in after-hours trading. Investors appeared to weigh the company's strong AI-driven growth against its high valuation and concerns about a less favorable near-term margin mix due to custom silicon ramps. The company's non-GAAP EPS was $0.94, with revenue exceeding forecasts by about $30 million.

Looking ahead, Marvell anticipates third-quarter revenue of $3.15 billion, projecting over 50% year-over-year growth. The company expects its non-GAAP operating margin to reach its long-term target range of 38% to 40% in the fourth quarter of fiscal 2027. This outlook suggests sustained demand, particularly in the data center segment, which is projected to grow about 60% in fiscal 2027.