Investors marvel at Marvell’s solid earnings and revenue beat on AI chip demand – News

Marvell Technology Inc.’s stock was flying high in late trading today after the chipmaker surpassed Wall Street’s expectations in its latest financial results and offered a promising short-term forecast.

The company delivered fourth-quarter earnings before certain costs such as stock compensation of 80 cents per share, squeaking past the analyst consensus estimate of 79 cents. Its revenue for the period jumped 22%n to $2.219 billion, surpassing the $2.207 billion analyst target. With those numbers, Marvell almost doubled its profitability: Net income rose to $396.1 million, up from $200.2 million in the year-ago period.

For the current quarter, the chipmaker said it’s looking for sales of about $2.4 billion, plus or minus 5%, surpassing the Street’s consensus estimate of $2.3 billion in revenue. Marvell’s stock soared more than 15% in extended trading, erasing a 3% loss it endured during the regular trading session amid a broader selloff of chip company stocks today.

In a statement, Chief Executive Matt Murphy (pictured) said the company generated $8.195 billion in full-year revenue for fiscal 2026, rising 42% from the year before. This was driven by “robust AI demand,” he said, referring to the company’s custom AI processors, which it manufactures on behalf of enterprises such as Amazon Web Services Inc. “In addition to our strong results and outlook, our design wins in fiscal 2026 hit an all-time record, which we expect will continue to fuel our future growth,” Murphy added.

AWS is thought to be the biggest buyer of customer processors from Marvell. The chipmaker plays a key role in designing its Trainium chips for artificial intelligence workloads, and it’s also believed to be working with the likes of Google Cloud and Microsoft Corp. as well, though it hasn’t said so publicly. The Trainium chips compete with Nvidia Corp.’s graphics processing units, which are the most popular silicon for running AI workloads today, though they’re available only as a service on AWS.

While Marvell hasn’t yet enjoyed the same traction as its rival Broadcom Inc. in custom processors, it has been spending a lot of money to make up ground. During the quarter it spent $5.5 billion on the networking startup Celestial AI Inc., which designs optical interconnect technology to enable more rapid data center communications. Celestial’s technology is critical for linking vast numbers of AI processors together, so they can operate as giant clusters and power advanced large language models.

In addition, Marvell spent $550 million to acquire XConn Technologies Holdings Inc., which manufactures high-speed networking switches that will likely be paired with Celestial’s interconnects. Both companies are expected to become key pieces of the puzzle for Marvell as it steps up its game in custom processors.

Murphy told analysts on a conference call that the company achieved a record number of customer wins in custom chips in fiscal 2026. Going forward, he expects the company’s fiscal 2027 revenue to “accelerate” because of the growing strength of its data center business. He predicted that bookings in that unit will grow “at a record pace” throughout the year.

JPMorgan analyst Harlan Sur told MarketWatch that the results have reassured investors that Marvell’s lead custom chip program with AWS remains on track. He said the company is also seeing strong demand for its optical digital signal processors, which convert electrical signals into light to enable low-latency, high-bandwidth data transmission in data centers.

With hyperscale data center operators such as AWS, Microsoft and Google all raising their capital expenditures guidance recently, Marvell is positioning itself to benefit, Sur said.

Photo: Marvell Technology