Marvell Technology (NASDAQ:MRVL) stock trended Friday after competitor Broadcom (NASDAQ:AVGO) delivered strong quarterly earnings.
Marvell seeks to challenge Broadcom’s market dominance by concentrating on high-performance data center networking, custom AI silicon, and optical interconnects.
Broadcom, in turn, maintains its formidable position through a broad product portfolio spanning semiconductors, storage, networking, and wireless technologies.
Also Read: Marvell Set To Double AI Chip Sales To $4 Billion Next Year, Analyst Projects
Broadcom’s third-quarter results surpassed expectations, with revenue rising 22% year-over-year to $15.95 billion, exceeding analyst estimates.
Adjusted earnings per share reached $1.69, beating the forecast of $1.65. This growth was primarily fueled by surging demand for custom AI accelerators, networking products, and its newly acquired VMware business.
CEO Hock Tan highlighted that AI revenue grew 63% to $5.2 billion and is projected to reach $6.2 billion in the fourth quarter, marking an impressive eleven consecutive quarters of AI-driven growth.
Further bolstering its market position, Broadcom announced a landmark $10 billion custom chip agreement. While Tan confirmed the deal with a “major customer,” the Financial Times identified the client as OpenAI.
These custom chips are intended to address the escalating compute requirements of ChatGPT’s estimated 700 million weekly users, with production scheduled to begin next year and large-scale shipments anticipated in 2026.
Despite both companies operating in the burgeoning AI space, their stock performance has diverged significantly. Broadcom’s shares are up over 32% year-to-date, while Marvell has declined 42%. The broader PHLX Semiconductor Index, which includes both, is up 14%.
Marvell’s underperformance can be attributed to its struggle to consistently meet financial forecasts. The company missed analyst revenue consensus in at least two of the last three quarters and adjusted EPS consensus in one.
Although Marvell’s second-quarter adjusted EPS of 67 cents topped the 66 cents estimate, its revenue of $2.006 billion narrowly missed the $2.009 billion forecast.
Marvell CEO Matt Murphy noted that revenue surged 58% year-over-year to a record high, driven by robust AI demand for custom silicon and electro-optics, as well as a recovery in enterprise networking.
For the third quarter, Marvell projects adjusted EPS of 69 cents to 79 cents on revenue between $1.957 billion and $2.163 billion, compared to consensus estimates of 72 cents and $2.105 billion, respectively.
Analyst opinions on Marvell remain mixed. Rosenblatt’s Kevin Cassidy acknowledged the earnings beat but pointed to weaker data center application-specific integrated circuit (ASIC) shipments and a trimmed fiscal 2027 revenue forecast.
JPMorgan’s Harlan Sur highlighted resilient consumer demand and long-term momentum from custom ASIC deals with Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).
Conversely, Goldman Sachs’ James Schneider maintained a cautious stance, citing Marvell’s softer guidance as a reflection of slower custom silicon traction and a loss of content at Amazon, even as Microsoft scales its own chip development.
Price Actions: MRVL stock is trading lower by 0.16% to $64.00 premarket at last check Friday. AVGO is up 11.01%.
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