Marvell’s Stock Soars After Strong Q3 Report

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Marvell Technology reported a third-quarter net revenue of $1.21 billion last week, a 61 percent increase compared to a year ago – exceeding the chip designer’s midpoint guidance of $1.145 billion from its estimates reported in late August.

Marvell’s results from its Innovium acquisition are included in its Q3 earnings.

Following the release of its Q3 earnings, Marvell stock (NASDAQ: MRVL) reached an all-time high on Dec. 3, rising 17.7 percent before closing at $83.59 per share. The chip designer also reported an adjusted $0.43 per share in its quarterly report, which exceeded Wall Street analysts’ expectations of $0.38.

According to Matt Murphy, Marvell’s president and CEO, the chip designer’s revenue increase reflects recent growth in its five markets, most notably data centers. Marvell’s data center business generated $500 million, accounting for 41 percent of its Q3 revenue, or 15-percent sequential growth.

“We continue to believe Marvell has a comprehensive portfolio for cloud data infrastructure, and think it is sharply capitalizing on secular trends toward high-speed clouds and 5G networks to win market share across its technologies,” said William Kerwin, an analyst for Morningstar.

Kerwin also raised his estimate for Marvell to $62 per share from $50, predicting “greater confidence in design-win momentum generating above-market growth in the long term.”

Acquisitions and metaverse

The strong results also reflect a string of acquisitions this year by Marvell, including completion of an April deal to buy Inphi Corp. for $20 billion. In October, Marvell acquired Innovium, Inc. for $1.1 billion. The deals underscore the chip designer’s expansion into the booming data center market.

For example, the acquisitions open the door for Marvell to co-package optics with Innovium’s cloud-optimized switch chips, analysts noted.

Murphy said acquisitions will help maintain Marvell’s positive revenue trajectory. Murphy added that the Innovium deal allows Marvell to become a leading provider of Ethernet switches in data centers, forecasting a $150 million in incremental revenue over the next fiscal year.

Murphy also highlighted the impact of the emerging metaverse on cloud technology trends.

“We expect the metaverse will significantly accelerate a number of key trends, which are already occurring in the cloud today, including the need to store huge amounts of data in a secure environment, connected by high-speed, electro-optic links to custom compute engines,” Murphy told analysts.

The metaverse could help pave the way toward advancing cloud-optimized silicon products, including those currently in development at Marvell, noted Murphy. Additionally, the metaverse could potentially boost Marvell’s 5G operations; the company expects a 30 percent sequential increase in its 5G business.


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