Strong Q1 Says Marvell Is Becoming Broadcom’s Most Credible Rival

Marvell Technology (MRVL) is emerging as one of the most important behind-the-scenes architects of next-generation AI infrastructure. The market has noticed. The stock is up more than 2.3x year to date, and the valuation has re-rated, moving from under 10x trailing sales in early January to near 22x today. See how Marvell’s price-to-sales multiple changed over time.

A move of that size requires the business to keep validating the multiple. Did the company’s Q1 results do that?

Marvell reported record revenue of $2.418 billion, up 28% year over year and 9% sequentially, above the midpoint of its own guidance. Data center revenue set a record at $1.833 billion, up 27% year over year. Management also raised its revenue forecast for both fiscal 2027 and fiscal 2028, citing AI-related bookings across optics, switching, and custom silicon.

Interconnects

The interconnect thesis received direct support in the quarter. AI systems now link hundreds of thousands of processors, and those chips have to talk to each other constantly. As the clusters get larger, moving data between chips becomes a bottleneck, and the connections themselves become a large and growing line item in what hyperscalers spend. The industry is shifting these connections to optical technology, and Marvell is a leading supplier, with meaningful share in segments such as 800G modules. In Q1 it reported strong demand for 800G and a fast ramp in the next generation, 1.6T.

Management now expects full-year fiscal 2027 data center revenue to grow roughly 50%, led by interconnect revenue growing more than 70%. Scale-out switch revenue is forecast to exceed $600 million in fiscal 2027, double the prior year, and to reach $1 billion in fiscal 2028. During the quarter Marvell closed its acquisition of Celestial AI, which moves optics closer to compute and eases hyperscaler memory constraints.

Custom silicon tracks the original case

Custom silicon is the second growth engine. Marvell designs chips to a specific customer’s specification, and it expects this revenue to grow more than 20% in fiscal 2027 and more than double in fiscal 2028, driven by multiple programs ramping and several new design wins.

AI is shifting from training a model once to running it billions of times a day to answer user queries, and at that volume electricity is a major cost. A chip built for one specific job runs that job using far less power than a general-purpose GPU, so it lowers the hyperscaler’s operating bill. Building their own chip also reduces how much they depend on Nvidia (NVDA), which gives them leverage on price and supply.

For Marvell, each win is a multi-year program with a single large customer, which makes the revenue durable once it ramps.

Marvell has disclosed more than 18 custom socket wins across major U.S. hyperscalers, several already in volume production, and it puts its broader design pipeline at over 50 opportunities worth roughly $75 billion in lifetime revenue. Management expects custom silicon to grow from under a quarter of data center revenue today toward more than half over time. See How Marvell Stock Surges To $400

Outlook and valuation

The forward numbers are what the stock is really trading on. Management guided second quarter revenue to $2.7 billion, up 35% year over year, expects full-year fiscal 2027 growth near 40%, and projects fiscal 2028 revenue around $16.5 billion, about $1.5 billion above its prior outlook. The growth rate is set to pick up through the year.

At a market value near $175 billion, the stock trades around 15x fiscal 2027 revenue and close to 11x fiscal 2028 revenue. Those could be seen as relatively fair multiples for a business compounding near 40% a year, as long as the company delivers on the guided path.

There are a couple of factors that anchor the case. The Nvidia partnership and investment made in March make Marvell a default supplier inside the design of AI accelerators and the networking around them, which pulls it into programs across the Nvidia ecosystem. Marvell is also the main alternative to Broadcom (AVGO) in custom chips. Broadcom is far larger and has a long record of raising prices on customers once they are locked in, so every hyperscaler has a clear reason to qualify a second source, and Marvell could fit the bill.

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