Shares of Marvell Technology experienced a significant surge on Wednesday, reaching a record high and pushing the semiconductor firm’s market capitalization beyond $100 billion for the first time. This remarkable performance followed the release of better-than-anticipated earnings and the announcement of an expanded agreement with Amazon, focusing on cloud software and hardware collaboration.
Marvell’s stock price jumped nearly 23% to just under $118 per share around 3:35 p.m. on Wednesday, increasing the company’s market capitalization to over $103 billion from $83 billion. The stock had earlier reached a high of $119.88.
On Tuesday, Marvell reported third-quarter revenue of $1.52 billion and adjusted earnings per share of $0.43, surpassing analyst expectations of $1.45 billion and $0.41, according to FactSet. The company also raised its guidance for the fourth quarter, anticipating increased revenue and substantial AI demand, projecting revenue between $1.71 billion and $1.89 billion and adjusted earnings per share of up to $0.65. This estimate significantly exceeded the previous projections of $0.52.
An existing partnership with Amazon Web Services (AWS) was expanded on Monday with a five-year, “multi-generational” agreement. Under this agreement, Marvell will supply Amazon with data center semiconductors, including custom AI products, aimed at reducing AWS’s costs.
Cody Acree, an analyst for Benchmark Research, noted on Wednesday that the firm considers Marvell to be a “unique, non-Nvidia alternative” in the AI and data center market. Meanwhile, a note from UBS suggested that Marvell’s AI revenue could reach $3.6 billion in 2025, exceeding the company’s $2.5 billion target.
Big Number
103%. That’s the percentage increase in Marvell’s shares so far this year.
Tangent
Shares of rival Nvidia increased by 3.7% on Wednesday, despite analysts suggesting Marvell is a rising threat in the AI market. Bank of America analyst Justin Post noted that Amazon has invested more than $20 billion in Nvidia’s chips, compared to between $1 billion and $2 billion in Marvell’s. Nvidia is also collaborating with AWS on Project Ceiba, a supercomputer for AI programs that utilizes over 20,000 of Nvidia’s Blackwell graphics processing units.
Key Background
Marvell’s stock performance this year has mirrored the growing demand for advanced chips used in generative AI technologies. Amazon, which designs its own in-house chips in partnership with Marvell, has also utilized Nvidia and other companies, emphasizing its diversified approach to AI product development. Reports indicate that Marvell has been approached by companies such as Amazon, Google, and Microsoft to provide tailored AI chips as an alternative to Nvidia, whose products currently dominate the market.
Reuters reported that Intel contacted Marvell’s chief executive, Matt Murphy, regarding the potential for him to become Intel’s next CEO, after CEO Pat Gelsinger’s resignation. Murphy, who was appointed as Marvell’s CEO in June 2016, appeared to decline the offer, stating to analysts on Tuesday that he was “100% focused” on Marvell’s growth.
