Marvell Technology (NASDAQ:MRVL) saw its shares tumble over 17% intra-day on Thursday after delivering quarterly results and guidance that fell short of investor expectations for stronger artificial intelligence-driven expansion.
The semiconductor company has capitalized on AI demand, particularly as supply chain constraints at Nvidia have pushed major tech firms like Microsoft and Amazon to seek alternative chip suppliers, including Marvell and Broadcom. However, the latest financial update failed to generate enthusiasm despite solid data center revenue growth.
For the fourth quarter, Marvell posted earnings per share of $0.60 on revenue of $1.82 billion, narrowly beating analyst expectations of $0.59 and $1.8 billion, respectively. Its key data center segment saw a massive 78% year-over-year increase in revenue, reaching $1.37 billion, fueled by demand for its custom AI chips that enable cloud providers to develop specialized processors.
The AI-driven custom chip market is experiencing significant expansion, with research firm 650 Group estimating its total value could reach $10 billion in 2024 and as much as $45 billion by 2028. Marvell executives highlighted the strong trajectory of AI-related revenue, emphasizing the data center’s growing share of the company’s overall business.
Looking ahead, Marvell’s first-quarter guidance set earnings expectations between $0.56 and $0.66 per share on revenue of approximately $1.875 billion, with a margin of plus or minus 5%. Analysts had been expecting an outlook of $0.60 EPS and $1.87 billion in revenue.