Marvell Stock Is Expensive, But the Growth Story Is Hard to Ignore

Marvell Technology (MRVL) reported strong second-quarter results and issued a positive outlook, yet its shares came under pressure after the earnings announcement. The selloff reflects two factors: a valuation that already prices in substantial growth and investor expectations that were high enough to make even solid guidance difficult to impress with.

Marvell stock isn’t a bargain. However, a favorable long-term outlook and strengthening demand exposure make it hard to ignore.

Marvell’s Growth Outlook Is Getting Stronger

Marvell’s growth trajectory is strengthening rapidly as demand for data center infrastructure continues to expand. In fiscal 2027’s second quarter, the company generated $2.7 billion in revenue, up 13% sequentially and 37% from the same period a year earlier. Adjusted EPS increased 40% year-over-year (YoY) to $0.94.

Notably, Marvell has raised its expectations for the remainder of fiscal 2027, with management now anticipating approximately $12 billion of full-year revenue, representing roughly 45% annual growth. That compares with the approximately $11.5 billion outlook issued earlier.

The stronger forecast is largely attributable to the company’s data-center business, which Marvell now expects to grow by about 60% in fiscal 2027, versus its previous estimate of approximately 50%. The improvement also appears increasingly broad-based, with interconnect products continuing to provide the largest contribution while the custom semiconductor business is positioned for a stronger second-half ramp.

Data Center Is Driving the Upside

Marvell’s data center opportunity is expanding. Its data center revenue was $2.17 billion in the second quarter, increasing 18% sequentially and 46% YoY. Both growth rates were significantly higher than in the first quarter, when data center revenue rose 11% sequentially and 27% YoY.

Management expects another substantial step-up in the third quarter. Data center revenue is projected to increase by more than 20% sequentially and approximately 75% YoY.

That acceleration reflects rising AI infrastructure spending and demand across several product categories. Marvell is benefiting from increased requirements for high-speed connectivity, switching, and custom silicon as hyperscalers expand AI computing capacity.

Interconnect remains particularly important. Demand for 800G optical products remains strong, while adoption of 1.6T solutions is beginning to accelerate and could become a larger contributor in fiscal 2028. Marvell’s switching business is also expected to more than double during fiscal 2027, supported by growing deployment of its 51.2T products across an expanding customer base.

The custom semiconductor business provides another significant source of potential upside. After a relatively limited contribution historically, custom demand is expected to increase sharply during the second half of fiscal 2027. Management expects the business to more than double in fiscal 2028 and continue accelerating in fiscal 2029.

MRVL’s Fiscal 2028 Expectations Have Moved Higher

Marvell raised its outlook for fiscal 2028. Management now forecasts approximately $18 billion of revenue, $1.5 billion above the $16.5 billion target communicated just one quarter earlier.

The guidance implies approximately 50% YoY revenue growth, compared with the previous expectation of about 45%. In other words, Marvell is raising its revenue forecast while simultaneously expecting a faster growth rate despite operating from a much larger revenue base.

Data center revenue is expected to increase by more than 60% in fiscal 2028, with growth coming from all major areas of the business. Custom semiconductor revenue is expected to more than double, strengthening the view that Marvell's opportunity is expanding beyond its established interconnect franchise.

The company also has a potentially meaningful opportunity through its commercial agreement with Alphabet's (GOOG) (GOOGL) Google related to custom semiconductor development.

Investment Case Is Strong, but Marvell Stock Already Prices in a Lot

The fundamental outlook is increasingly difficult to dismiss. Marvell is benefiting from structural AI infrastructure spending, accelerating data center demand, expanding custom silicon opportunities, and rising requirements for high-bandwidth connectivity.

However, Marvell stock has already appreciated significantly, rising over 164% year-to-date (YTD). Further, it trades at a forward P/E multiple of 78.3, indicating that much of the positives are already priced in the stock.

How to Play MRVL Stock?

Marvell’s accelerating revenue outlook, expanding data center opportunity, and growing custom-silicon business provide a compelling long-term investment case. Further, analysts are bullish and maintain a “Strong Buy” consensus rating post-Q2 earnings release.

The better strategy is therefore to buy weakness rather than momentum. MRVL stock is not cheap, but its growth trajectory is strong enough to make significant pullbacks worth buying.