Analysts turn heads with Nvidia rival's stock target after earnings

Shares of Marvell Technology (MRVL) dropped 18% on Aug. 29 after the artificial intelligence chipmaker’s data center revenue missed estimates and its guidance for the current quarter came in soft.

The company reported adjusted earnings of 67 cents per share, compared with expectations of 66 cents. Revenue rose 58% to $2.01 billion, in line with estimates.

Marvell is a key competitor to Nvidia (NVDA) in the custom AI chip market. But its core data center segment fell short for the fiscal second quarter. Sales came in at $1.49 billion, missing Wall Street’s forecast of $1.51 billion.

For the fiscal third quarter, Marvell projected revenue of $2.06 billion, slightly below analysts’ estimate of $2.11 billion.

“We expect overall data center revenue in the third quarter to be flat sequentially with electro optic strength offset by lower custom revenue,” CEO Matt Murphy said on the earnings call.

“We expect growth to be non-linear in business with the fourth quarter substantially stronger than the third,” he added.

Marvell stock is down 43% year-to-date, while Nvidia has surged nearly 30%.

Image source: Marvell

Could Marvell be the next Nvidia?

Most AI training is currently performed on Nvidia's costly graphics-processing units, but some cloud providers are exploring alternatives due to rising costs and supply limits.

Last December, Marvell announced a five-year partnership with Amazon Web Services (AMZN) to scale its Trainium AI chips and other custom computing solutions.

Still, Marvell faces a steep challenge in scaling its AI business to Nvidia’s level.

Last year, Marvell's shares surged 83% on strong demand for its AI chips and optimism about its growth in data centers.

But the stock tumbled sharply in March and has not made a comeback to its previous high, weighed down by tepid earnings and macro pressure.

Marvell stock is down 43% year-to-date, while Nvidia has surged nearly 30%.

Even Nvidia shares have stalled from their earlier momentum. The stock dropped more than 4% in the two trading days after its Aug. 27 earnings report.

“We see limited room for further earnings upside revision or share price catalyst in the near term unless we have increasing clarity over upside in 2026 cloud service provider capex expectations,” HSBC analyst Frank Lee wrote in a recent note, according to CNBC. He rates the stock a hold.

Wall Street lowers Marvell's stock price target

Several analysts have cut their stock target for Marvell after its earnings.

Citi lowered its price target on Marvell to $92 from $96 and reiterated a buy rating on the shares.

“We view MRVL’s data center comments as customer concentration-driven and not a broad read on the AI demand,” the analyst said in a research note.

Citi noted that Marvell’s guidance showed no change to the expected timing of Amazon’s Trainium 3 rollout. The firm emphasized that custom chip programs are inherently uneven from quarter to quarter, and Trainium is large enough that this lumpiness shows up in results.

Bank of America is more pessimistic about the stock. Analysts led by Vivek Arya downgraded Marvell to neutral from buy with a price target of $78, down from $90.

More Nvidia:

“Unlike prior calls, we did not hear the same level of confidence and visibility about MRVL's AI growth prospects in the near and medium term,” Arya wrote.

Arya pointed to higher uncertainty around the timeline of Microsoft’s Maia project, which now looks more like fiscal 2028, and Marvell’s share in Amazon’s next-generation 3nm project.

Marvell stock closed at $62.87 on Aug. 29.