Marvell Earnings: Accelerating AI Growth and Lingering Market Weakness Lead us to Maintain Valuation

We maintain our $61 fair value estimate for shares of narrow-moat Marvell Technology after it reported fiscal second-quarter results and fiscal third-quarter guidance in line with our expectations. On the positive side, Marvell materially raised its outlook for artificial intelligence revenue growth this year. On the negative side, the firm pushed out its outlook for recoveries in its data center storage and enterprise networking businesses. We still view fiscal 2024 as a mixed bag, with promising strong growth out of AI partially offsetting downcycles in some of Marvell’s other customer end markets. Long-term, we continue to view Marvell as very well positioned in data center infrastructure and able to benefit from surging AI spending. Shares pulled back after the release, we think due to pushed-out recoveries in storage and enterprise markets. We now see shares as undervalued.