Marvell Technology raised its revenue guidance for fiscal 2027 and fiscal 2028 after posting quarterly results in line with estimates, but shares dropped as analysts questioned how much upside its expanded Google partnership still offers. The stock fell as declines built throughout the earnings call.
Marvell Technology raised its annual forecast on Thursday, yet investors shrugged off the news. Shares were trading about 7% lower in extended trading, with the decline building as the earnings call went on.
Marvell lifts revenue guidance
CEO Matt Murphy said demand for artificial-intelligence-related offerings looks exceptionally robust. He added that Marvell expects revenue growth to accelerate through the rest of its fiscal year from the 37% rate posted in its latest quarter.
The company now expects overall revenue to grow 45% to about $12 billion in fiscal 2027, before reaching $18 billion in fiscal 2028. That is up from previous guidance calling for $11.5 billion in fiscal 2027 and $16.5 billion in fiscal 2028.
Wall Street questions the Google upside
Investors have been excited about Marvell's expanded partnership with Google, through which the technology giant got a warrant to purchase Marvell shares. But on the earnings call, analysts tried to unpack how much potential upside the new agreement really offers, and whether some of that opportunity had already been captured in Marvell's projections.
According to management, revenue from programs covered by the agreement through fiscal 2028 is already reflected in the overall custom revenue target. Management said the bigger impact will come more in fiscal 2029 and beyond.
The quarterly results
Marvell reported revenue of $2.7 billion for the July quarter, in line with analyst expectations tracked by FactSet. Adjusted earnings of 94 cents per share came in a penny above the consensus view.
Murphy said strong demand for the company's data-center products drove the results, with data-center revenue growing 46% from the previous year. He also expects the custom-chip business to see a significant acceleration starting in the second half of fiscal 2027.
For the October quarter, Marvell is forecasting revenue of $3.15 billion at the midpoint, above the FactSet consensus of $3 billion. Marvell shares had nearly tripled on the year heading into the earnings report.
Ahead of the report, Jefferies analyst Blayne Curtis said Marvell's story had materially improved, pointing to a report saying custom-chip customer Microsoft is planning to introduce its new Maia 300 chip later this year. He also pointed to Marvell's expanded agreement with Alphabet, under which the companies will co-develop products in Google's custom-chip ecosystem, including inference accelerators and storage controllers.
Source: MarketWatch
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