Market Selloff Despite Strong Results
Marvell’s stock collapsed—dropping as much as 19%—following its Q2 FY2026 report. Although revenue rose 58% year-over-year to $2.01 billion and non-GAAP EPS hit a solid $0.67, the weak forward guidance, particularly in its data center segment, spooked investors.
While robust in absolute terms, Marvell’s projected ~30% AI-related revenue growth trails peers like Nvidia and Broadcom, who are growing at 50–60%. This indicates Marvell is not gaining market share in AI hardware.
Hesitant Analyst Sentiment & Price Target Downgrades
Analysts responded quickly with cautious moves. Melius Research reiterated a Hold with a $70 target. UBS cut its target to $95 from $110, though maintaining a Buy. Bank of America downgraded to Neutral, slashing its target to $78. Needham trimmed its target from $85 to $80 while still rating the stock a Buy. Most notably, Cantor Fitzgerald downgraded to Neutral and cut its target to just $60 from $125, warning of sharp downside risk.
Consensus valuations now range between $70 and $95, but the wide dispersion underscores the uncertainty.
Weakened AI and Data Center Momentum
Management’s guidance reinforced investor concerns. Q3 revenue was forecast at $2.06 billion ±5%, below Wall Street’s $2.11 billion expectation. Data center demand is expected to remain flat, raising doubts about Marvell’s ability to capitalize on the AI buildout. Potential risks include hyperscalers such as Microsoft delaying AI chip rollouts and Amazon consolidating suppliers, which could diminish Marvell’s pipeline.
Macro Risks and Reduced Spending
Macroeconomic pressures are also adding to the uncertainty. Citi recently reduced its price target to $96, citing softer cloud capex forecasts—from 40% growth to 35% in 2025, and from 20% to 15% in 2026. Slower hyperscaler expansion reduces visibility for Marvell’s longer-term growth.
Valuation Still Elevated
Despite the recent selloff, Marvell continues to trade at premium multiples. At roughly 9.6× sales and ~30× forward earnings, the stock looks expensive relative to its profitability profile. Trefis rated Marvell as “unattractive,” citing weak profitability and only moderate operating efficiency despite its lofty valuation.
Fair Value and Price Target Summary
| Analyst / Source | Rating | Price Target | Implication |
|---|---|---|---|
| Melius Research | Hold | $70 | Limited upside |
| UBS | Buy | $95 (↓ from $110) | Cautious optimism |
| Bank of America | Neutral | $78 (↓ from $90) | Negative near-term |
| Needham & Co. | Buy | $80 (↓ from $85) | Conservative |
| Cantor Fitzgerald | Neutral | $60 (↓ from $125) | Very pessimistic |
| Citi | — | $96 (↓ from $122) | Reflects macro risks |
| Consensus (TipRanks) | Strong Buy | ~$88.50 | Average outlook |
| Trefis | — | — | Labels stock unattractive |
Conclusion
Marvell’s recent earnings beat masks underlying challenges. Guidance points to flat demand in its core data center segment, while competitors like Nvidia and Broadcom are accelerating. Analysts have downgraded targets sharply, with some seeing the stock falling as low as $60. Despite this, Marvell still trades at expensive multiples, leaving limited margin of safety.
Summary
- Growth Lagging Peers: AI/data center growth slower than competitors.
- Mixed Analyst Views: Wide range of targets ($60–$95) reflects uncertainty.
- Valuation Concerns: Still trading at high multiples despite profitability weakness.
- Macro Headwinds: Cloud capex forecasts softening, reducing visibility.
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