Can MRVL's Communications Recovery Drive Broad-Based Growth?

Marvell Technology’s MRVL communications and other business segment has been recovering as customer inventories normalize. In the first quarter of fiscal 2027, communications and other revenues increased 29% year over year to $585 million. MRVL’s AI data center networking business has been at the center of its growth.

Networking remains a key beneficiary of rising AI cluster size and complexity. Marvell now expects its interconnect business to grow more than 70% year over year in fiscal 2027, supported by scale-out PAM ramp-ups and growing contributions from scale-up and scale-across networking.

Within optics, the company expects TIAs and drivers to exceed a $1 billion annualized run rate in the next few quarters and sees a path to about $1 billion annualized DCI module revenues during fiscal 2028. Management also expects scale-up optics to ramp up in fiscal 2028, with revenues now forecasted to more than double versus its prior outlook of about $150 million.

The company has also launched the Golden Cable initiative to accelerate and expand the Active Electrical Cable (AEC) ecosystem for faster deployment of AI infrastructure by cloud and hyperscaler customers. However, Marvell Technology’s move toward lower-margin custom silicon and other AI infrastructure products is resulting in a gradual decline in the gross margin.

However, MRVL expects its communications end market to decline in the mid-single-digit range sequentially in the second quarter while growing in the high-single-digit range year over year, which implies the recovery is continuing but not linear. A steadier baseline outside the data center can moderate volatility through periods when hyperscaler build cycles vary while still keeping the company exposed to long-term infrastructure upgrades.

How Competitors Fare Against MRVL Stock

MRVL faces stiff competition in the AI networking and custom silicon space from Broadcom AVGO and Advanced Micro Devices AMD.

Broadcom is a leader in the domain of custom silicon solutions for data centers. Broadcom’s advanced 3.5D XDSiP packaging platform is critical to ensure the performance and efficiency of custom AI XPUs.

Advanced Micro Devices is another established player in the custom silicon solutions and AI accelerator market. Advanced Micro Devices offers semi-custom SoCs and Instinct Accelerators to power data centers.

MRVL's Price Performance, Valuation and Estimates

Shares of Marvell Technology have rallied 157.3% year to date compared with the Zacks Electronics - Semiconductors industry’s growth of 35.3%.

MRVL YTD Performance Chart

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From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 13.52X, higher than the industry’s average of 5.58X.

MRVL Forward 12-Month (P/S) Valuation Chart

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The Zacks Consensus Estimate for MRVL’s fiscal 2027 and 2028 earnings implies year-over-year growth of 42.3% and 52.9%, respectively. The estimate for fiscal 2027 and 2028 have been revised upward in the past 60 days.

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Marvell Technology currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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