Broadcom (NASDAQ:AVGO) shares slipped Friday, weighed down by weakness in rival Marvell Technology (NASDAQ:MRVL) after the latter posted better-than-expected quarterly earnings but tempered sentiment with cautious guidance and a wave of analyst price forecast cuts.
Both companies are key players in the fast-expanding market for custom AI silicon and networking infrastructure used by cloud providers and hyperscale data centers.
Marvell’s stock slid despite reporting adjusted earnings of 67 cents per share, slightly ahead of the 0.66 cents consensus estimate. Revenue came in at $2.006 billion, a fraction below the $2.009 billion forecast, with adjusted gross margin steady at 59.4%.
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The company credited ongoing demand for its AI-focused custom silicon and electro-optics products for the resilience in profitability.
The outlook, however, underwhelmed investors. For the fiscal third quarter, Marvell projected revenue between $1.96 billion and $2.16 billion, bracketing the Street’s $2.11 billion forecast. It guided adjusted earnings per share in the range of 69 cents to 79 cents, compared with the consensus of 72 cents.
Analysts trimmed forecasts, citing execution risks and uneven demand.
Rosenblatt Securities called Marvell’s results mixed, citing weaker data center ASIC shipments that weighed on revenue despite an earnings beat. The firm cut its fiscal 2027 revenue outlook after the sale of Marvell’s Automotive Ethernet unit and softer data center trends but kept a Buy rating, pointing to a strong pipeline of 18 ASICs and 50-plus design wins. Its 12-month price forecast was lowered to $95 from $124.
JP Morgan said July-quarter results were in line, with stronger consumer sales offsetting softer data center and carrier demand. Guidance for October was also broadly in line, excluding the divestiture. The bank expects flat data center revenue, 30% growth in carrier and enterprise networking, and a reacceleration of ASIC shipments in 2026. It reiterated Overweight but cut its price forecast to $120 from $130, highlighting Amazon’s (NASDAQ:AMZN) Trainium and Microsoft’s (NASDAQ:MSFT) Maia ASIC ramps.
Goldman Sachs viewed results as in line, with margins ahead but limited near-term upside in custom silicon. Analyst James Schneider kept a Neutral rating, trimming his price forecast to $72 from $75 and EPS estimates by about 5% to $3.00. He flagged ongoing content loss at Amazon but noted optical demand remains strong, with custom silicon expected to rebound later this year.
This cautious sentiment surrounding Marvell’s forecast unfolded amid broader concerns within the semiconductor industry. On Friday, reports emerged that Alibaba Group (NYSE:BABA) is currently testing a domestically manufactured AI inference chip.
This initiative aligns with China’s broader strategy to lessen its dependency on U.S. suppliers, such as Nvidia (NASDAQ:NVDA). The chip, designed for a broad range of inference tasks, was reportedly built in China rather than being outsourced to Taiwan Semiconductor Manufacturing (NYSE:TSM), further underscoring Beijing’s push for technological self-sufficiency.
Price Action: AVGO stock is trading lower by 4.54% to $294.63 at last check Friday.
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