Marvell Stock Plunges 19% as Weak Guidance Overrides Record Revenue
Despite a 58% year-over-year revenue surge fueled by AI demand, the chipmaker's disappointing Q3 forecast spooked investors.
Shares of Marvell Technology (NASDAQ: MRVL) plummeted nearly 19% in a stark reaction to the company's latest earnings report, as a weak third-quarter forecast overshadowed record-breaking Q2 revenue. The sell-off highlights investor sensitivity to any signs of slowing growth in the booming artificial intelligence sector, even for companies reporting significant gains.
On the surface, the chipmaker delivered a stellar quarter. Marvell , posting a record net revenue of $2.006 billion, a 58% increase year-over-year. CEO Matt Murphy celebrated the results, stating, "Marvell's growth is being fueled by strong AI demand for our custom silicon and electro-optics products."
Despite the record top-line number, investors zeroed in on two critical areas that fell short of Wall Street's expectations. The company's data center segment, its most important business, generated $1.49 billion, slightly missing the consensus estimate of $1.51 billion. More significantly, Marvell's revenue guidance for the upcoming third quarter was set at $2.06 billion at the midpoint, well below the roughly $2.11 billion analysts had anticipated.
The guidance miss, however, came with a crucial caveat. Marvell executives explained that the forecast was impacted by the faster-than-expected sale of its automotive Ethernet business. Factoring that divestiture out, the guidance would have been more in line with expectations. Still, the headline number, combined with a projected sequential decline in custom silicon revenue for Q3, was enough to trigger the sharp decline.
Some , with the stock's plunge far exceeding the modest downward revisions to price targets. While acknowledging near-term headwinds and increasing competition from rivals like Broadcom, many still see significant long-term upside. Marvell noted its custom AI design pipeline is at an all-time high, signaling that despite the current turbulence, its strategic position in the AI infrastructure build-out remains robust.