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Marvell Closes Cavium Buyout, Boosts Foothold in Chip Market

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Marvell Technology (MRVL - Free Report) recently announced that it has concluded the acquisition of its rival, Cavium, to establish a stronger foothold in the semiconductor industry.

The growing demand for artificial intelligence (AI), cloud and edge computing, and the transition of the wireless industry toward 5G are driving the need for high bandwidth, power-efficient and strong system-on-chip (SoC) solutions.

Marvell believes that semiconductor industry’s growth will be powered by progress in the data economy. The acquisition well positions it to address the growing needs of this industry.

Importance of the Acquisition

The acquisition will help Marvel to focus on the infrastructure market, which will offer storage, processing, networking, wireless connectivity and security products, among others, with unparalleled features.

The buyout, which was announced toward the end of the last year, comes on the back of growing consolidation in the semiconductor industry.

The Marvell-Cavium merger creates a synergy, which will ensure a broader portfolio of infrastructure solutions and a robust team to efficiently address customers’ needs.

Price Performance

With a cash-rich profile, strong balance sheet and no long-term debt, Marvell is well positioned to carry out further mergers in the future.

In the past three months the stock has gained 0.7% against the industry’s 1.1% decline. Looking at the positive trend of the stock, we expect the acquisition to bode well for the stock going further.

Zacks Rank & Other Stocks to Consider

Marvell currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Computer and Technology sector are SCIENCE APPLICATIONS INTERNATIONAL (SAIC - Free Report) and Verint (VRNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Amdocs (DOX - Free Report) carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for SCIENCE APPLICATIONS, Verint and Amdocs is projected to be 5%, 10% and 9.05%, respectively.

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