Marvell Technology (MRVL) reported a strong second quarter earnings report last week. Revenue of $2.739 billion, up 37%, surpassing midpoint guidance by $39 million. GAAP EPS was $0.33 a share, non-GAAP EPS stood at $0.94 a share. Data center revenue was at the forefront, growing 46%. Cash flow from operations was $605.5 million.
CEO Matt Murphy raised Marvell’s full year guidance saying, “”AI-related bookings remain exceptionally robust, and we expect our revenue growth to accelerate further through the remainder of fiscal 2027.”
The company is expected to post $1.10 EPS, and $3.15 billion in revenue for the third quarter, 4% higher than analyst expectations.
Marvell delivered record revenue in Q2 of $2.739 billion. The company’s Q3 guidance was raised by 4% to $3.15 billion. Despite the beat, Marvell shares fell dropped over 3% after the report.
CEO Matt Murphy reaffirmed a $10 billion XPU revenue target for 2029, also expecting the custom business to more than double in 2028. The company was able to ink a $100 billion custom AI chip agreement with Google.
The issue with investors is that this Google deal brings in a potential of 7% equity dilution from warrants, and increasing custom silicon mix is already pressuring gross margins.
Valuation verdict at $279:
At ~56x trailing non-GAAP EPS, MRVL is priced for continued execution. The base case of $285 by end of 2026 (about 20% upside) is achievable at 35x FY2027E EPS of ~$4.12, assuming roughly $13B in full-year revenue — right in line with management’s ~40% growth trajectory. The bull case of $350 requires the Google deal to translate into accelerating FY28 revenue with margin stabilization. The bear case of $180 reflects a scenario where custom silicon margin compression and hyperscaler in-sourcing slow the revenue ramp below expectations.
The single number to watch in Q3: whether management can guide to $3.3B+ for Q4 and affirm the FY28 custom AI revenue doubling. That’s the catalyst that would drive a re-rating toward the bull case.
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