Marvell Stock: Overlooked AI Winner?

Marvell Technology (NASDAQ:MRVL) stock has seen a sharp sell-off this year, falling by close to 31% since early January, compared to the Nasdaq-100, which gained about 16% over the same period. However, there’s a good reason to consider the stock at current levels of about $78 per share. Why? Marvell still trades at a reasonable valuation versus AI peers, and its balance sheet remains solid. Moreover, with AI infrastructure entering a new phase driven by efficiency and specialization, Marvell’s positioning could prove stronger than the market is pricing in. Here’s a closer look at what’s happening with Marvell and why we think the stock has room for gains.

Image by Pete Linforth from Pixabay

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Why did the stock lag in 2025?

The slump appears to be largely due to timing and program delays across hyperscalers, rather than a deterioration of Marvell’s core business.

Main causes of the selloff:

• Lumpy custom AI accelerator orders, typical for bespoke chip cycles.
• Microsoft’s Maia chip delays to 2026, affecting Marvell’s associated silicon volumes.
• Concerns over Amazon’s Trainium 3 design and rollout weighing on revenue expectations.
• Rival Broadcom won new deals with OpenAI, which likely tightened the competitive landscape.
• Broader AI correction after Nvidia’s Q3 beat-and-raise, which sparked sector-wide doubts about the durability of AI spending.

The setbacks are real, but do not diminish Marvell’s long-term strategic fit within the AI ecosystem.

What are Marvell’s strengths?

High-speed connectivity and custom silicon. Marvell has built its AI presence around the infrastructure layer — a crucial but often overlooked part of AI scalability.

Key strengths include:

• Leading SerDes and optical interconnect IP enabling high-speed data movement.
• Deep expertise in optical/electrical interconnects, which is essential to AI data center performance.
• Strong custom ASIC capabilities offering lower power draw, better cost-per-performance, and workload-specific optimization
• Ability to deliver silicon tightly integrated with hyperscaler architectures, unlike general-purpose GPUs.

As AI models scale, the bottleneck becomes data transfer, not just compute — an area where Marvell is already a top-tier provider.

Why Marvell’s AI Opportunity Could Strengthen From Here

Even with short-term volatility, long-term industry trends increasingly favor Marvell’s capabilities

Hyperscaler capex remains enormous:

• Amazon could spend up to $105B in 2025.
• Microsoft, Alphabet, and Meta are planning $80B, $75B, and $72B, much of it tied to AI infrastructure.
• Oracle disclosed hundreds of billions in cloud commitments from OpenAI and other major clients.

AI workload mix is evolving:

• Industry is shifting from heavy training cycles to massive-scale inference, where:
  • Efficiency outweighs raw compute
  • Power and cost constraints push demand toward custom silicon
  • ASICs and optical technologies gain importance
• This shift aligns directly with Marvell’s strengths.

A Rough Year for the Stock — But Valuation Isn’t the Issue

Despite the steep decline, Marvell’s fundamentals continue to look stable, and its valuation is far from stretched.

Valuation context:

• 28x FY’26 forward earnings — below AMD (41x) and Nvidia (38x).
• $4.8B in debt vs $69B market cap, a modest 7% debt-to-equity ratio.
• $1.2B in cash with a 5.9% cash-to-assets ratio.
• Bloomberg reported SoftBank considered merging Marvell with ARM, signalling Marvell’s strategic importance in AI silicon.
• With a $65B valuation, Marvell remains attractive for companies expanding in AI hardware.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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