Marvell Stock Set Several New Records in Q2. What It Will Take for MRVL to Hit New Highs.

Custom chipmaker Marvell Technology (MRVL) came out with a marvellous set of numbers for second quarter of 2027. It ticked all the boxes of a company operating in the fast-growing ASIC market of the AI infrastructure buildout: double beat on both revenue and earnings, record revenues, solid demand, and guidance raise for the current and next year.

Yet, the shares are down more than 14% since the Aug. 27 results, as investor expectations were not met, apparently. A $120 billion custom chip deal with Alphabet's (GOOG) (GOOGL) Google spread over several years spooked investors, with CEO Matt Murphy revealing that material revenue flow from the deal will start from fiscal 2029.

However, the market reaction was not commensurate with Marvell's showing in Q2, which exceeded all expectations.

About Marvell

Founded in 1995, Marvell is an AI infrastructure company centered on data center connectivity, custom silicon, optical interconnects, switching, storage, and AI infrastructure. Its custom silicon business in particular includes custom AI accelerators, XPUs, networking chips, storage and memory controllers, and data center interconnect products. It has an impressive customer base that includes Amazon.com's (AMZN) Amazon Web Services, Google, Microsoft (MSFT), Tesla (TSLA), and Apple (AAPL), among others. In fact, Nvidia Corporation (NVDA) actually invested $2 billion in Marvell in 2026 and partnered with it through NVLink Fusion, with CEO Jensen Huang anointing it to be the next trillion-dollar market cap company. 

Valued at a market cap of $189.5 billion, MRVL stock is up a sensational 148.1% year-to-date (YTD). Notably, the stock also offers a dividend yield of 0.10%, and with a payout ratio of 10%, the headroom for growth remains.

Q2: A Tale Of Growth & Raise

Before delving into the Q2 numbers, what deserves attention first is the company's commentary about revenues for fiscal 2027 and 2028. Marvell raised revenue guidance for both years. Marvell now expects revenue in fiscal 2027 and 2028 to be $12 billion and $18 billion, up from $11.5 billion and $16.5 billion guided a quarter ago, respectively. Notably, within this, in fiscal 2028, Marvell expects data center revenues to rise by 60% in fiscal 2028, reflecting that demand remains strong in the largest segment of the AI buildout.

This was reflected in the Q2 numbers as well.

Marvell reported record net revenues of $2.74 billion in Q2 2027, up 37% from the prior year. Record revenues notwithstanding, the pace of growth could have been higher as its much larger peer and direct competitor, Broadcom (AVGO), saw its revenues rise by 48% in their Q2 numbers. Nevertheless, data center revenues rose by 46% from the prior year to $2.17 billion.

However, gross margins narrowed to 58.9% from 59.4% in the year-ago period as a rise in stock-based compensation to $15.9 million from $13.4 million in the prior year acted as a spoilsport. So, earnings shot up by 40.3% in the same period to $0.94 per share, just surpassing the consensus estimate of $0.93 per share. Notably, this was the fourth consecutive quarter of earnings beat from the company. For Q3, Marvell expects EPS to be between $1.05 per share and $1.15 per share, the midpoint of which would denote a YoY growth of 44.7%.

In terms of gross margins, Marvell expects the same to range between 57.5% and 58.5%, the midpoint of which would denote a decline of about 3%.

Net cash from operating activities improved to $605.5 million from $461.6 million in the prior year. Overall, Marvell ended its Q2 2027 with a cash balance of $3.93 billion, with no short-term debt on its books. Yet, the long-term debt of about $5 billion is showing up as increased interest expenses on the income statement. Interest expense grew to $61.6 million from $51.9 million in the same period last year.

Valuations also remain elevated. MRVL stock has a forward price-to-earnings, price-to-sales, and price-to-cash flow of 51.48 times, 15.77 times, and 55.79 times, which are all above the sector medians of 22.69 times, 3.47 times, and 20.00 times, respectively.

Analyst Opinion On MRVL Stock

Considering this, analysts have deemed the MRVL stock to be a “Strong Buy” with a mean target price of $290.94, which denotes a potential upside of 37.9% from current levels. Out of 36 analysts covering the stock, 26 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and seven have a “Hold” rating.