Chipmaker Marvell’s shares jump to record high on AI-powered Q4 forecast

:Marvell Technology’s shares surged about 22 per cent to a record high on Wednesday after the chipmaker’s optimistic forecast boosted investor confidence in AI-linked stocks.
If gains hold, the Santa Clara, California-based company’s market capitalization could increase by more than $18 billion, pushing its valuation above the $100 billion mark.
The company, which produces custom AI chips for major cloud providers that help GenAI speedily process large amounts of data, forecast fourth-quarter revenue above estimates on Tuesday.
“Marvell is capitalizing on a massive artificial intelligence chip opportunity with a burgeoning custom accelerator portfolio and a dominant optical chip position,” Morningstar analysts said in a note.
Marvell is on track to exceed its earlier target of $1.5 billion in AI revenue in the current fiscal year, CEO Matt Murphy said on Tuesday.
“We are seeing strong custom AI demand continue into the fourth quarter and have secured supply chain capacity,” Murphy said.
Reuters reported on Tuesday that CEO Murphy is being considered a potential candidate for the position of CEO at the struggling chipmaker Intel. However, Murphy said during a post-earnings call that he remains “100 per cent focused on Marvell.”
Marvell’s shares have climbed nearly 60 per cent this year, driven by Wall Street’s AI-focused “picks-and-shovels” trade.
Efforts by hyperscalers such as Microsoft, Meta, and Alphabet to reduce reliance on AI chip leader Nvidia’s supply-constrained processors have benefited companies like Marvell and its larger competitor, Broadcom.
“The custom processing business is largely expected to be a potential Nvidia disruptor,” said Carson Group analyst Blake Anderson.
The company’s data center segment, which includes custom chips, saw 98 per cent growth to a record $1.10 billion in the third quarter, accounting for over 70 per cent of total revenue in the quarter, compared to about 40 per cent in the year-ago period.
Broadcom’s shares rose nearly 2 per cent, while Nvidia and Qualcomm edged higher. Intel and AMD’s shares fell between 0.5 per cent and 2 per cent.