Marvell Earnings: We Raise Our Medium-Term AI Forecast and Bring Our Valuation Up to $75

We raise our fair value estimate for narrow-moat Marvell Technology to $75 per share, from $65, as we raise our medium-term revenue forecast to account for significant growth in generative artificial intelligence sales. We believe Marvell will be a significant beneficiary of investment into generative AI with diverse exposure across custom accelerators, optical chips, and merchant switch chips. Management now sees upside to the targets provided at its AI investor day in April, which we see as positive and aligned with our bullish long-term growth thesis. Marvell’s non-AI end markets remained weak in the first fiscal quarter, but we believe AI strength will more than offset weakness elsewhere through fiscal 2025, and that softer demand is a short-term dynamic. We see Marvell as fairly valued. Investors eager to play into generative AI may see a good opportunity currently, given overvaluations of other AI beneficiaries under our coverage.