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Marvell Shares Plunge as Data Center Outlook Disappoints
29 Aug
Summary
- Marvell's data center demand outlook falls short of expectations
- Investor bets on AI chips for cloud giants like Microsoft and Amazon
- Marvell's custom chip reliance exposes it to customer demand swings
On August 29, 2025, Marvell Technology's shares took a significant hit, plunging 11.3% in premarket trading, as the chipmaker's data center demand outlook fell short of lofty investor expectations. Marvell had been a beneficiary of the growing demand for custom chips that power AI workloads for cloud computing giants such as Microsoft and Amazon.
However, recent results from industry peers have shown signs of a cooling market for AI-focused chipmakers. Nvidia's latest earnings beat forecasts, but its data center growth slowed, and its shares fell post-report. Marvell's reliance on these so-called custom application-specific integrated circuits (ASICs) has exposed it to customer inventory-led swings in demand.
Marvell's CEO, Matthew Murphy, stated on a post-earnings call on Thursday that data center revenue in the third quarter will be flat on a sequential basis, but he did not elaborate on the source of the weakness. Murphy acknowledged that "lumpiness" is normal when large cloud compute providers build out infrastructure, but analysts at Morgan Stanley expressed surprise that Marvell's ASIC business continues to fall.
Additionally, a recent media report suggested that Microsoft had delayed its in-house AI chip rollout to 2028 or later, potentially impacting Marvell's pipeline, as it supplies key components for those designs. Furthermore, Amazon Web Services, another major Marvell customer, has been ceding ground to faster-growing rivals, with Microsoft's Azure and Alphabet's Google Cloud outpacing AWS in recent quarters.
