Marvell Technology shares fell 8% in premarket trading on Thursday even after the chipmaker beat second-quarter estimates and raised its fiscal 2028 revenue outlook to around $18 billion. Analysts said elevated expectations tied to a recent Google chip partnership left investors wanting more, while Wolfe Research raised its price target to $280 from $250.
Marvell Technology shares fell 8% in premarket trading despite a second-quarter revenue beat, as its raised fiscal 2028 outlook failed to meet investors' elevated expectations. The chipmaker's second-quarter revenue rose 37% year-on-year to $2.7 billion, coming in $39 million above the guidance it gave in May.
Guidance raised, but Google impact still years away
Marvell now expects fiscal 2028 revenue to grow about 50% year-on-year to around $18 billion, up from its previous forecast of $16.5 billion. It also raised its fiscal 2027 revenue guidance to approximately $12 billion, from a prior $11.5 billion, on broad-based strength across its connectivity franchises and robust demand in its core businesses.
That improved guidance does not yet include a substantial impact from Marvell's newly announced Google custom-chip business, which is not expected to have significant impact until fiscal 2029. Management said the custom business is likely to more than double in fiscal 2028 and grow to over $10 billion in fiscal 2029. Under the deal, Google can buy up to 58.97 million Marvell shares at $206.58 each, subject to purchase targets through fiscal 2033.
Data center demand drives the beat
Data center revenue growth accelerated to 46% year over year, which Marvell's Chairman and CEO Matt Murphy attributed to continued strong demand across the company's data center portfolio. Goldman Sachs analysts said investor expectations were elevated heading into the quarter given robust spending at key customers and the previously disclosed Google relationship. According to Goldman Sachs: "high investor expectations" shaped the market reaction, though the bank called the results an incremental positive and remains neutral on the stock, citing its higher valuation relative to peers.
Analysts raise price targets
Wolfe Research raised its price target on Marvell to $280 from $250 while maintaining an Outperform rating, modeling approximately $6.57 in fiscal 2028 earnings per share on roughly $18 billion in revenue and 57.5% gross margins. The firm noted Marvell is likely to offer additional commentary at its October Analyst Day. Morgan Stanley, by contrast, raised its target to $246 from $224 while keeping an Equalweight rating, pointing to Marvell's increased data center growth forecast for calendar 2027, adjusted to 60% from 50%. Marvell stock is up 184% so far this year, buoyed by demand for its products used in AI infrastructure.
Sources: CNBC, Investing.com
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