Marvell's stock climbs as earnings report brings an improved growth forecast

By Emily Bary

The semiconductor company is benefiting from AI traction and expects growing operating leverage

After seeing its stock fall after the past four earnings reports, Marvell Technology Inc. is set to fare better this time around.

Shares of the semiconductor company rose more than 7% in after-hours trading Thursday following an upbeat outlook for the ongoing quarter and continued momentum in artificial-intelligence offerings.

The company expects $1.45 billion in fiscal third-quarter revenue at the midpoint, while analysts had been looking for $1.41 billion. Marvell's (MRVL) outlook also calls for 40 cents in adjusted earnings per share the midpoint, which is above the 38-cent FactSet consensus.

"Next quarter, we expect our combined enterprise networking and carrier end markets to return to growth, while our data-center end market growth accelerates," Chief Executive Matt Murphy said in a release.

The company anticipates sequential growth in all of its end markets during the period. It's also calling for "a significant increase in operating leverage," according to Murphy's statement.

See also: Dell's stock gets a boost as earnings show huge growth in AI servers

For the latest quarter, Marvell saw revenue decline 5% to $1.27 billion, whereas analysts had been looking for $1.25 billion.

Marvell posted a net loss of $193 million, or 22 cents a share, compared with $216 million, or 24 cents a share, in the year-earlier period. On an adjusted basis, the company earned 30 cents a share, in line with the consensus view.

Murphy called out "strong demand from AI." Specifically, Marvell has seen "strong growth from our electro-optics products," and its custom AI offerings have started to ramp, he said.

Data-center revenue was up 92% on a year-over-year basis to $881 million, while analysts were looking for $865 million. Other business categories all declined on a year-over-year basis, though Marvell saw a sharp sequential improvement in consumer revenue and modest sequential improvement in carrier infrastructure.

Read: Buy Nvidia's stock on the dip, these analysts say

-Emily Bary

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08-29-24 2047ET

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