Marvell Technology is experiencing significant momentum, driven by its strong position in the artificial intelligence (AI) sector and strategic market expansions. The company recently saw its stock jump and price targets boosted by analysts, following an event where it unveiled an increased market opportunity for custom AI chips and data center semiconductors. This positive outlook is fueled by Marvell’s growing pipeline of chip wins and its focus on key data center customers.
Marvell’s Expanding AI Market Opportunity
Marvell Technology has significantly revised its projections for the custom AI chip market, underscoring the rapid growth in this sector. The company now anticipates a much larger addressable market, reflecting its strong competitive stance and innovative solutions.
- Custom AI Chips (ASICs): Marvell projects the market opportunity to reach $55 billion by 2028, a substantial increase from its previous estimate of $43 billion. In 2023, this market was valued at $6.6 billion.
- Total Data Center Semiconductors: The company also raised its total addressable market for data center semiconductors to $94 billion by 2028, up from $75 billion. This market, which includes switching, interconnect, storage, and accelerated custom-compute chips, was $21 billion in 2023.
Marvell aims to capture a 20% market share in both custom AI chips and the broader data center market by 2028.
Key Takeaways from Marvell’s Event
During a recent company event, Marvell Technology highlighted several achievements and future prospects that have contributed to its boosted price targets and positive market sentiment.
- Increased Chip Wins: Marvell announced a pipeline of 18 chip wins across more than 10 customers. This is a significant increase from just four customers noted a year prior.
- Future Contract Opportunities: The company anticipates more than 50 contract opportunities over the next several years, indicating a robust growth trajectory.
- Strategic Customer Base: Marvell’s data center customers include major tech giants such as Google (Alphabet), Amazon Web Services (Amazon.com), and Microsoft.
Analyst Confidence and Price Target Hikes
Following Marvell’s announcements, financial analysts have expressed increased confidence in the company’s future performance, leading to revised price targets.
- BofA Securities analyst Vivek Arya reiterated a "buy" rating on Marvell stock and raised his price target from $80 to $90.
- Arya emphasized Marvell’s unique position in the data center market, citing its singular focus and broad intellectual property across various critical areas, including compute, XPU, networking, electro-optics, security, and memory/storage.
Marvell Technology’s stock saw a notable increase, closing up 7.1% at $74.95, reflecting the market’s positive reception to these developments. The company’s strategic focus on custom AI chips and its expanding presence in the data center sector are key drivers of its current momentum.
Sources
- Marvell Technology price target boosted following AI event, Proactive financial news.
- Marvell Stock: Custom AI Chip Prospects Raised, Investor’s Business Daily.
