Marvell Stock Sits Far Below Its High, But Its Operating Margin Has Kept Climbing

The reported operating margin has risen in each of the last two years, and management plans to grow costs far more slowly than revenue from here.

Marvell Technology (MRVL) has more than doubled over the past year and still sits a long way under its own peak. The shares are at $163.40, up about 116% over the trailing twelve months against 15.5% for the S&P 500, and yet only about 52% of their 52-week high of $316.35. What has not kept pace with the price is the reported operating margin: 16.4% over the trailing twelve months, after 0.6% a year earlier and negative 8.6% two years ago.

Can The Climb From Operating Losses To 16.4% Continue?

The mechanics behind that climb are checkable. In fiscal 2026, revenue rose 42% while adjusted earnings per share rose 81%, roughly twice the top-line rate, which the company points to as the operating leverage in its model. And the plan is to keep the gap open. On the adjusted basis management guides to, which strips out stock compensation, acquisition and restructuring charges, operating expense is planned to grow only in the mid to high teens on a percentage basis in fiscal 2028. That is well under the roughly 45% revenue growth guided for the same year, and the spread is what would carry the company to the upper end of a 38% to 40% target operating margin model as fiscal 2028 progresses, a target management sets on that adjusted basis rather than the reported one.

What Happens To Margin If Supply Caps That 45% Growth?

Supply, not demand, is the live risk here. By management’s own account anything touching AI has been supply constrained for years, and Marvell is paying to hold its place in line: roughly $1 billion of prepayments to suppliers during fiscal 2027 to lock in capacity, funded off a balance sheet carrying net debt of only about 0.3 times EBITDA. Those payments are meant to buy a revenue line of nearly $11.5 billion in fiscal 2027 and $16.5 billion in fiscal 2028, against $8.7 billion over the trailing twelve months. That is a lot of capacity to secure on schedule.

The margin case is that the full ramp does not have to arrive. With adjusted operating expense planned to grow in the mid to high teens, revenue growth would have to slow below that pace before the cost side stops adding to margin, and for scale, the weakest of the last four quarters grew revenue 22% year over year, above that plan but not by much. The catch sits elsewhere.

Cash Conversion, Gross Margin And The Multiple

Three things temper the case. Operating cash flow covered about four-fifths of net income over the trailing twelve months, so reported profit is currently ahead of the cash behind it, and the prepayments run through fiscal 2027. The other half of the margin equation is gross margin, guided on the adjusted basis at roughly 59% for fiscal Q2 2027, about where it has been running, so the leverage needs that line to hold rather than improve. And the stock is not cheap on the improvement already delivered: 57 times trailing earnings puts it toward the top of its own ten-year history, so a price well below the 52-week high is not the same thing as a low valuation.

The Case Is The Direction Of Profit, Not The Multiple

So the argument here is narrow and specific. It is not a cheap stock, and not a promise that the guided ramp lands on time. It is a cost structure that has carried the reported operating margin from a loss to 16.4% in two years, with the plan calling for costs to keep growing far slower than sales through fiscal 2028. If you are weighing a price roughly half its 52-week high against a business whose margin is still improving, that is the trade-off to test rather than the AI story around it. The two things that would confirm it when fiscal Q2 2027 is reported are the reported operating margin extending the climb, and operating cash flow closing the gap on net income.

One Cost Line Cannot Size Your Portfolio

A widening margin is a good reason to look hard at one company. It is not a method for running your money. Position size, what sits beside a holding, and a rule for the day a thesis stops working decide more of the result than any single correct call, and a name at 57 times earnings is where that shows up. That is the thinking behind the Trefis High Quality Portfolio, which holds a spread of quality names under rules rather than one story at a time. The Trefis High Quality (HQ) Portfolio has a track record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.