Why Marvell's AI Revenue Could Top $4 Billion By 2025, Analyst Explains

Marvell shares rose ahead of earnings, driven by JP Morgan's Harlan Sur maintaining an Overweight rating with a $130 price target, citing strong AI chip demand from Amazon and Google. Sur anticipates Marvell's AI chip sales reaching $4 billion this year, fueled by volume ramps of Amazon Trainium 2 ASIC and Google Axion ARM CPU programs, alongside growth in 800G/1.6T optical DSPs. The analyst also expects cyclical recovery in enterprise and carrier segments to contribute to revenue growth, projecting April quarter results of $1.875 billion and July quarter guidance of $2.0 billion+.

Analysis

JP Morgan analyst Harlan Sur has reiterated an Overweight rating on Marvell Technology (MRVL) with a price target of $130, citing robust AI chip demand, particularly from Amazon and Google, which is anticipated to ramp significantly in Q2. This positive outlook contributed to a 5.69% increase in MRVL's stock price to $64.15. The analyst projects Marvell will achieve $4 billion in AI-related revenues this year, representing a more than twofold year-over-year increase, driven by the volume ramp of Amazon's Trainium 2 ASIC and Google's Axion ARM CPU programs, alongside strong demand for its 800G products and the initial deployment of 1.6T optical DSPs. Sur expects April quarter results to reach $1.875 billion (a 3% sequential increase) and July quarter guidance to surpass $2.00 billion (a 7% sequential rise), bolstered by AI ASIC ramps, growth in 800G/1.6T AI optical shipments, and cyclical improvements in its enterprise and carrier segments. Further, Marvell's Microsoft AI ASIC MAIA Gen 2 program is progressing towards a calendar year 2026 ramp, and the company has secured the Gen 3 MAIA program. The divestiture of its automotive business, expected to close in calendar year 2025, is anticipated to be a revenue headwind of $225-$250 million in fiscal year 2026 but is projected to be $0.05-$0.10 accretive to earnings per share, while the custom data center and AI ASIC pipeline continues to expand.

Key Decisions for Investors

• Investors should closely monitor Marvell's upcoming earnings report on Thursday to ascertain if results and forward guidance align with the analyst's bullish expectations, particularly regarding the AI revenue ramp and data center growth.
• Consider the significant potential upside indicated by the $130 price target relative to the current trading price, weighing the strong AI-driven growth narrative against execution risks and broader market conditions for semiconductor stocks.
• Evaluate Marvell's long-term growth prospects in AI, noting the secured Microsoft MAIA Gen 3 program and the increasing ramp of 1.6T DSPs, alongside the earnings accretion expected from the automotive business divestiture.