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Should You Buy, Sell or Hold MRVL Stock Post Strong Q2 Earnings?
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Key Takeaways
Marvell Technology's Q2 EPS surged 123% YoY on $2.01B revenues, up 58% year over year.
Data center sales jumped 69% YoY to $1.49B, led by custom AI silicon and electro-optics.
Gross margin fell to 59.4% as higher chip costs and rivalry from AVGO, AMD and MU weighed.
Marvell Technology (MRVL - Free Report) has delivered robust second-quarter fiscal 2026 results, driven by traction in custom AI silicon and electro-optics offerings, boosting its data center revenues. The company also experienced recovery in Enterprise and Carrier Infrastructure businesses due to inventory normalization and advanced node migration among its customers.
On Aug. 28, MRVL reported second-quarter fiscal 2026 earnings of 67 cents per share, which increased 123.3% year over year and 8.1% sequentially, driven by higher revenues and effective cost management. MRVL’s second-quarter fiscal 2026 revenues of $2.01 billion grew 58% year over year.
Although the strong top- and bottom-line growth should have instilled investors’ confidence in the stock, it’s necessary to analyse the fundamentals and valuation of the company to understand what’s happening with Marvell Technology.
Data Center Segment: MRVL’s Growth Powerhouse
Marvell Technology’s data center segment has experienced rapid growth in the past six quarters. In the second quarter of fiscal 2026, Marvell Technology’s data center segment grew 69.2% year over year to $1.49 billion.
Marvell Technology’s data center growth has been driven by traction in custom XPUs, electro-optics interconnect products, and next-generation switch divisions due to their increasing application in AI computation and networking across both hyperscale and enterprise spaces.
In the second quarter, MRVL’s next-generation 200G per lane 1.6T PAM4 DSPs saw volume shipments. Marvell Technology also announced a 2nm custom SRAM that will be applied in next-generation AI infrastructure.
Marvell Technology deepened its collaboration with Microsoft Azure in the HSM space and launched packaged-integrated voltage regulator power solutions for advanced infrastructure. Additionally, Marvell Technology’s ramping up of 51.2 Tbps switches played a formidable role. All the aforementioned factors propelled MRVL’s strong data center growth.
With AI adoption accelerating across industries, MRVL’s stronghold in the data center market makes it a critical beneficiary of the trend. Marvell Technology’s crucial contribution to the development of AI chips positions it well for sustained revenue growth. The Zacks Consensus Estimate for MRVL’s fiscal 2026 revenue growth rate is pegged at 41% year over year.
Key Challenges Faced by Marvell Technology
Although Marvell Technology is experiencing strong top-line growth due to its successful AI-focused custom silicon semiconductor business, the bottom line is suffering due to the low-margin nature of this business.
Fundamentally, Marvell Technology’s custom AI silicon products, including XPUs, are lowering the company’s gross margins due to higher costs associated with the development of these chips. This has further been worsened by the ongoing macroeconomic uncertainties.
The U.S. government’s unfavorable stance toward China has added to investors’ skepticism as MRVL derives a considerable portion of its revenues from this Asian giant. The fear of sanctions and persistent tariff threats to China, where Marvell Technology owns research and development facilities, is a concerning factor.
Additionally, softness in MRVL’s consumer end market due to volatility in gaming demand and lumpy order patterns in the industrial business has deepened investor worries.
MRVL’s Margin Pressure Exacerbated by Competition
Competitive pressure from semiconductor giants like Broadcom (AVGO - Free Report) and Advanced Micro Devices (AMD - Free Report) in the AI accelerator market and Micron Technology (MU - Free Report) in the HBM space has added to Marvell Technology’s woes.
Advanced Micro Devices is a strong player in the custom silicon solutions and AI accelerator space with its semi-custom SoC offerings and Instinct Accelerators that power numerous data centers. Advanced Micro Devices’ reconfigurable Alveo Adaptable Accelerator Cards are used to speed up compute-intensive applications in data centers.
Broadcom’s advanced 3.5D XDSiP packaging platform is specifically designed to enhance the performance and efficiency of custom AI XPUs for AI accelerators. Micron Technology has made significant strides in AI-optimized memory solutions, with MU’s HBM3E products gaining attention for their superior power efficiency and bandwidth.
Constant competition from these industry giants has led it to invest heavily in sales and marketing and research and development to stay competitive. MRVL’s non-GAAP gross margin of 59.4% contracted 250 basis points (bps) year over year and 40 bps sequentially in the second quarter of fiscal 2026.
While the Zacks Consensus Estimate for fiscal 2026 earnings has remained unchanged for the past 60 days, the estimate for 2027 has been revised downward in the past seven days.
Image Source: Zacks Investment Research
MRVL's Price Performance, Valuation and Estimates
Shares of Marvell Technology have lost 41.5% year to date against the Zacks Electronics - Semiconductors industry’s growth of 16.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 6.24X, lower than the industry’s average of 8.64X.
Image Source: Zacks Investment Research
Conclusion: Hold MRVL Stock for Now
Marvell Technology’s strong second-quarter earnings results reaffirm its position as a leader in AI-driven computing. MRVL’s robust Data Center revenues and recovering Enterprise and Carrier Infrastructure businesses strengthen its investment thesis. However, lofty valuation, macro headwinds and competitive challenges are a concern for the company right now.
Image: Bigstock
Should You Buy, Sell or Hold MRVL Stock Post Strong Q2 Earnings?
Key Takeaways
Marvell Technology (MRVL - Free Report) has delivered robust second-quarter fiscal 2026 results, driven by traction in custom AI silicon and electro-optics offerings, boosting its data center revenues. The company also experienced recovery in Enterprise and Carrier Infrastructure businesses due to inventory normalization and advanced node migration among its customers.
On Aug. 28, MRVL reported second-quarter fiscal 2026 earnings of 67 cents per share, which increased 123.3% year over year and 8.1% sequentially, driven by higher revenues and effective cost management. MRVL’s second-quarter fiscal 2026 revenues of $2.01 billion grew 58% year over year.
Although the strong top- and bottom-line growth should have instilled investors’ confidence in the stock, it’s necessary to analyse the fundamentals and valuation of the company to understand what’s happening with Marvell Technology.
Data Center Segment: MRVL’s Growth Powerhouse
Marvell Technology’s data center segment has experienced rapid growth in the past six quarters. In the second quarter of fiscal 2026, Marvell Technology’s data center segment grew 69.2% year over year to $1.49 billion.
Marvell Technology’s data center growth has been driven by traction in custom XPUs, electro-optics interconnect products, and next-generation switch divisions due to their increasing application in AI computation and networking across both hyperscale and enterprise spaces.
In the second quarter, MRVL’s next-generation 200G per lane 1.6T PAM4 DSPs saw volume shipments. Marvell Technology also announced a 2nm custom SRAM that will be applied in next-generation AI infrastructure.
Marvell Technology deepened its collaboration with Microsoft Azure in the HSM space and launched packaged-integrated voltage regulator power solutions for advanced infrastructure. Additionally, Marvell Technology’s ramping up of 51.2 Tbps switches played a formidable role. All the aforementioned factors propelled MRVL’s strong data center growth.
With AI adoption accelerating across industries, MRVL’s stronghold in the data center market makes it a critical beneficiary of the trend. Marvell Technology’s crucial contribution to the development of AI chips positions it well for sustained revenue growth. The Zacks Consensus Estimate for MRVL’s fiscal 2026 revenue growth rate is pegged at 41% year over year.
Key Challenges Faced by Marvell Technology
Although Marvell Technology is experiencing strong top-line growth due to its successful AI-focused custom silicon semiconductor business, the bottom line is suffering due to the low-margin nature of this business.
Fundamentally, Marvell Technology’s custom AI silicon products, including XPUs, are lowering the company’s gross margins due to higher costs associated with the development of these chips. This has further been worsened by the ongoing macroeconomic uncertainties.
The U.S. government’s unfavorable stance toward China has added to investors’ skepticism as MRVL derives a considerable portion of its revenues from this Asian giant. The fear of sanctions and persistent tariff threats to China, where Marvell Technology owns research and development facilities, is a concerning factor.
Additionally, softness in MRVL’s consumer end market due to volatility in gaming demand and lumpy order patterns in the industrial business has deepened investor worries.
MRVL’s Margin Pressure Exacerbated by Competition
Competitive pressure from semiconductor giants like Broadcom (AVGO - Free Report) and Advanced Micro Devices (AMD - Free Report) in the AI accelerator market and Micron Technology (MU - Free Report) in the HBM space has added to Marvell Technology’s woes.
Advanced Micro Devices is a strong player in the custom silicon solutions and AI accelerator space with its semi-custom SoC offerings and Instinct Accelerators that power numerous data centers. Advanced Micro Devices’ reconfigurable Alveo Adaptable Accelerator Cards are used to speed up compute-intensive applications in data centers.
Broadcom’s advanced 3.5D XDSiP packaging platform is specifically designed to enhance the performance and efficiency of custom AI XPUs for AI accelerators. Micron Technology has made significant strides in AI-optimized memory solutions, with MU’s HBM3E products gaining attention for their superior power efficiency and bandwidth.
Constant competition from these industry giants has led it to invest heavily in sales and marketing and research and development to stay competitive. MRVL’s non-GAAP gross margin of 59.4% contracted 250 basis points (bps) year over year and 40 bps sequentially in the second quarter of fiscal 2026.
While the Zacks Consensus Estimate for fiscal 2026 earnings has remained unchanged for the past 60 days, the estimate for 2027 has been revised downward in the past seven days.
Image Source: Zacks Investment Research
MRVL's Price Performance, Valuation and Estimates
Shares of Marvell Technology have lost 41.5% year to date against the Zacks Electronics - Semiconductors industry’s growth of 16.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 6.24X, lower than the industry’s average of 8.64X.
Image Source: Zacks Investment Research
Conclusion: Hold MRVL Stock for Now
Marvell Technology’s strong second-quarter earnings results reaffirm its position as a leader in AI-driven computing. MRVL’s robust Data Center revenues and recovering Enterprise and Carrier Infrastructure businesses strengthen its investment thesis. However, lofty valuation, macro headwinds and competitive challenges are a concern for the company right now.
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.