Should You Sell Your Marvell Stock Now That Higher Forecasts Are Not Enough?
Marvell Technology (MRVL) raised its revenue outlook in late August. Yet its stock has fallen 16.4% over the past three months, before dividends. The S&P 500 returned 4.2% with dividends reinvested over the same stretch. After its late-August results, investors worried about when a key AI chip deal will pay off. Management placed the biggest gains from it in fiscal 2029 and beyond. Meanwhile, the shares already trade at a far higher multiple of profit than the S&P 500.
How Much Are Buyers Paying For Marvell’s Growth?
Marvell trades at 88.0 times its earnings over the past twelve months. That ratio is called the price-to-earnings, or P/E. It shows how many dollars investors pay for each dollar of yearly profit. The S&P 500 trades at 22.5 times. So Marvell costs almost four times as much per dollar of profit.
A P/E that high only holds up if the business keeps growing fast. So far, growth has been strong. Marvell’s revenue has grown 21% a year on average over the past three years. The S&P 500 managed 5.8% a year.
Today, most of Marvell’s revenue comes from chips for data centers, where AI demand keeps rising, management said. Management expects revenue to grow about 50% in fiscal 2028. Its forecast is about 45% growth for fiscal 2027, so growth should speed up. The stock’s reaction to those forecasts is worth a closer look.
Why Did Marvell Stock Fall After Raising Its Forecasts?
In late August, Marvell lifted its fiscal 2028 revenue outlook to about $18 billion. That was $1.5 billion more than it expected just one quarter earlier. The shares still fell 8% in premarket trading the next day, to $223.10. They have since recovered to $258.83, above the $241.45 they closed at before the results. Reuters said worries about when revenue from its AI chip deal with a large customer would arrive overshadowed the strong results.
That deal is the main attraction for shareholders. Management described the customer as one of the largest adopters of custom silicon. The expanded agreement covers programs already running, new design wins and potential future programs.
The catch is when the money arrives. Asked about the deal’s size, management said most of it is already in the fiscal 2028 outlook, and that because of this, the big impact would come in fiscal 2029 and beyond. It also declined to put a figure on its fiscal 2029 custom chip revenue. So a buyer today pays 88.0 times past profit while waiting for that big impact.
What Could Move Marvell Stock Next?
The next event is Marvell’s Investor Day on October 6. Management said it will give a deeper look at the drivers of its longer-term growth there. It also pointed to that day when it declined to size its fiscal 2029 custom chip revenue.
A large, clear figure for fiscal 2029 custom chip revenue would show the payoff is big, not just late. That would give the stock’s high P/E firmer footing. A vague answer would leave shareholders paying that multiple while they keep waiting.
How To Act On MRVL?
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