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MRVL Q2 Earnings Beat on Data Center Strength, Outlook Raised
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Key Takeaways
Marvell Technology posted Q2 revenues of $2.74B, fueled by record data center sales of $2.17B.
MRVL expects custom revenues to more than double year over year in fiscal 2028.
Marvell Technology raised fiscal 2027 revenue guidance to roughly $12B and fiscal 2028 to $18B.
Marvell Technology, Inc. (MRVL - Free Report) delivered second-quarter fiscal 2027 adjusted earnings of 94 cents per share, which increased 40.3% year over year and beat the Zacks Consensus Estimate by 1.1%.
Marvell Technology's revenues of $2.74 billion increased 36.6% and topped the Zacks Consensus Estimate by 1%.
The quarter benefited from strong AI-related demand across MRVL’s data center portfolio, where the data center represented 79% of total revenues, underscoring the growing weight of connectivity, switching and custom silicon in the company’s sales mix.
MRVL Rides on Broad Data Center Demand
Data center revenues reached a record $2.17 billion, up 46% year over year and 18% sequentially. Growth was broad-based, with strength in optical interconnect, switching and custom products as hyperscalers continued expanding AI infrastructure.
Marvell Technology, Inc. Price, Consensus and EPS Surprise
Demand remained strong for 800G optical DSPs, while MRVL said its 1.6T business is ramping rapidly. Scale-out switching is on track to more than double in fiscal 2027, supported by a broader customer base adopting the company’s 51.2T products.
MRVL Builds Out AI Connectivity
The company is also targeting opportunities beyond traditional scale-out networks. As AI clusters span multiple data centers, MRVL expects greater demand for data center interconnect products, including coherent-enabled 1.6T ZR and ZR+ modules.
Management also highlighted growing scale-up opportunities as customers evaluate optical interconnect and purpose-built switching technologies. MRVL is engaged with customers across NPO and CPO optical architectures and supports UALink, ESUN and NVLink scale-up switching through internal products and its NVIDIA partnership.
MRVL Expands Its Custom Silicon Franchise
MRVL expects a significant acceleration in its custom business during the second half of fiscal 2027. The company remains confident that custom revenues will more than double year over year in fiscal 2028, supported by both XPU and XPU-attach products.
An expanded commercial agreement with a Tier 1 hyperscaler covers existing programs, new design wins and potential future programs. The relationship spans AI inference accelerators, storage controllers, network interface controllers, memory interface controllers and near-memory compute tied to the TPU ecosystem.
MRVL Posts Stronger Operating Leverage
Non-GAAP gross margin was 58.9%, while non-GAAP operating expenses were $610.8 million. Non-GAAP operating income rose to $1 billion, producing an operating margin of 36.6%, up 180 basis points year over year and 160 basis points sequentially.
For the third quarter, Marvell Technology expects non-GAAP gross margin of 57.5% to 58.5% and non-GAAP operating expenses of about $655 million. The expected custom-product ramp is forecast to create a sequential gross-margin headwind.
MRVL Generates Cash and Secures Capacity
Operating cash flow totaled $605.5 million compared with $461.6 million a year earlier. The company ended the quarter with $3.93 billion in cash and cash equivalents and $4.96 billion in total debt.
MRVL repurchased $200 million of common stock and paid about $54 million in dividends. The company remains on pace for approximately $1 billion of supplier capacity prepayments in fiscal 2027 as it secures supply to support expected growth.
MRVL Raises Its Growth Outlook
For the third quarter of fiscal 2027, Marvell Technology forecasts revenues of $3.15 billion (+/-5%), implying about 15% sequential growth at the midpoint. Non-GAAP diluted earnings are expected to be $1.10 per share, (+/-5 cents).
Management raised its fiscal 2027 revenue outlook to roughly $12 billion, suggesting about 45% growth, from the prior view of approximately $11.5 billion. Data center revenues are now expected to grow about 60% this year. For fiscal 2028, MRVL lifted its revenue forecast to approximately $18 billion, up $1.5 billion from its prior outlook, with growth expected at about 50% year over year.
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View the Zacks #1 Rank List
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MRVL Q2 Earnings Beat on Data Center Strength, Outlook Raised
Key Takeaways
Marvell Technology, Inc. (MRVL - Free Report) delivered second-quarter fiscal 2027 adjusted earnings of 94 cents per share, which increased 40.3% year over year and beat the Zacks Consensus Estimate by 1.1%.
Marvell Technology's revenues of $2.74 billion increased 36.6% and topped the Zacks Consensus Estimate by 1%.
The quarter benefited from strong AI-related demand across MRVL’s data center portfolio, where the data center represented 79% of total revenues, underscoring the growing weight of connectivity, switching and custom silicon in the company’s sales mix.
MRVL Rides on Broad Data Center Demand
Data center revenues reached a record $2.17 billion, up 46% year over year and 18% sequentially. Growth was broad-based, with strength in optical interconnect, switching and custom products as hyperscalers continued expanding AI infrastructure.
Marvell Technology, Inc. Price, Consensus and EPS Surprise
Marvell Technology, Inc. price-consensus-eps-surprise-chart | Marvell Technology, Inc. Quote
Demand remained strong for 800G optical DSPs, while MRVL said its 1.6T business is ramping rapidly. Scale-out switching is on track to more than double in fiscal 2027, supported by a broader customer base adopting the company’s 51.2T products.
MRVL Builds Out AI Connectivity
The company is also targeting opportunities beyond traditional scale-out networks. As AI clusters span multiple data centers, MRVL expects greater demand for data center interconnect products, including coherent-enabled 1.6T ZR and ZR+ modules.
Management also highlighted growing scale-up opportunities as customers evaluate optical interconnect and purpose-built switching technologies. MRVL is engaged with customers across NPO and CPO optical architectures and supports UALink, ESUN and NVLink scale-up switching through internal products and its NVIDIA partnership.
MRVL Expands Its Custom Silicon Franchise
MRVL expects a significant acceleration in its custom business during the second half of fiscal 2027. The company remains confident that custom revenues will more than double year over year in fiscal 2028, supported by both XPU and XPU-attach products.
An expanded commercial agreement with a Tier 1 hyperscaler covers existing programs, new design wins and potential future programs. The relationship spans AI inference accelerators, storage controllers, network interface controllers, memory interface controllers and near-memory compute tied to the TPU ecosystem.
MRVL Posts Stronger Operating Leverage
Non-GAAP gross margin was 58.9%, while non-GAAP operating expenses were $610.8 million. Non-GAAP operating income rose to $1 billion, producing an operating margin of 36.6%, up 180 basis points year over year and 160 basis points sequentially.
For the third quarter, Marvell Technology expects non-GAAP gross margin of 57.5% to 58.5% and non-GAAP operating expenses of about $655 million. The expected custom-product ramp is forecast to create a sequential gross-margin headwind.
MRVL Generates Cash and Secures Capacity
Operating cash flow totaled $605.5 million compared with $461.6 million a year earlier. The company ended the quarter with $3.93 billion in cash and cash equivalents and $4.96 billion in total debt.
MRVL repurchased $200 million of common stock and paid about $54 million in dividends. The company remains on pace for approximately $1 billion of supplier capacity prepayments in fiscal 2027 as it secures supply to support expected growth.
MRVL Raises Its Growth Outlook
For the third quarter of fiscal 2027, Marvell Technology forecasts revenues of $3.15 billion (+/-5%), implying about 15% sequential growth at the midpoint. Non-GAAP diluted earnings are expected to be $1.10 per share, (+/-5 cents).
Management raised its fiscal 2027 revenue outlook to roughly $12 billion, suggesting about 45% growth, from the prior view of approximately $11.5 billion. Data center revenues are now expected to grow about 60% this year. For fiscal 2028, MRVL lifted its revenue forecast to approximately $18 billion, up $1.5 billion from its prior outlook, with growth expected at about 50% year over year.
Zacks Rank & Other Stocks to Consider
MRVL currently carries a Zacks Rank #2 (Buy).
Dell Technologies (DELL - Free Report) , ACI Worldwide (ACIW - Free Report) and ACM Research (ACMR - Free Report) are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. DELL, ACIW and ACMR sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DELL shares have skyrocketed 275.2% in the year-to-date period. The Zacks Consensus Estimate for DELL’s second-quarter fiscal 2027 earnings suggests year-over-year growth of 52%. The consensus estimate has been revised upward in the past seven days.
ACIW shares have gained 13.5% in the year-to-date period. The Zacks Consensus Estimate for ACIW’s third-quarter 2026 earnings suggests a year-over-year decline of 38.5%. The consensus estimate has been revised downward in the past 30 days.
ACMR shares have skyrocketed 104.1% in the year-to-date period. The Zacks Consensus Estimate for ACMR’s third-quarter 2026 earnings suggests a year-over-year rise of 41.6%. The consensus estimate has been revised upward in the past 30 days.