Marvell Technology stock jumped Wednesday after the chipmaker increased its addressable market for custom chips for artificial intelligence applications.
At a company event on Tuesday, the Santa Clara, Calif.-based firm sized the market opportunity for custom AI chips at $55 billion in 2028, up from its prior target of $43 billion. The market was worth $6.6 billion in 2023.
Marvell also raised its total addressable market for data center semiconductors to $94 billion in 2028, up from $75 billion previously. That includes switching, interconnect and storage as well as accelerated custom-compute chips. The market size was $21 billion in 2023.
Marvell is targeting 20% market share in both custom AI chips, known as application-specific integrated circuits or ASICs, as well as its total addressable data center market by 2028.
Marvell competes with Broadcom in the custom AI chip market.
On the stock market today, Marvell stock rose 7.1% to close at 74.95.
Marvell Stock Gets Price-Target Hike
BofA Securities analyst Vivek Arya reiterated his buy rating on Marvell stock and raised his price target to 90 from 80.
"We continue to like Marvell as the rising tide of AI capex can help drive potential upside for one of the few franchises with a singular data-center focus, and with breadth of leading IP (intellectual property) across compute, XPU, networking, electro-optics, security, and memory/storage," Arya said in a client note.
At the event, Marvell announced a pipeline of 18 chip wins across more than 10 customers, Arya said. A year ago, it noted just four customers. Further, Marvell sees more than 50 contract opportunities over the next several years, he said.
Marvell's data center customers include Alphabet unit Google, Amazon.com unit Amazon Web Services and Microsoft.
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