Marvell Stock Sinks 35%, But Most Analysts Are Bullish on MRVL Ahead of Q2

Marvell Technology's (MRVL) stock has seen a significant 35.6% decline from its 52-week high. Despite this drop, analysts covering MRVL maintain a bullish outlook ahead of the company's Q2 earnings release on Aug. 27. This optimism is largely driven by strong demand for Marvell's data center products and impressive bookings, which indicate a multiyear growth cycle.

The broad capital spending environment, particularly from hyperscalers investing heavily in AI infrastructure, also supports Marvell's bullish prospects. Marvell anticipates revenue of $2.7 billion for Q2, reflecting a 12% sequential growth and a 35% increase from the previous year. Management expects data center revenue to grow in the mid-to-high teens sequentially, about 45% year-over-year.

This growth trend is expected to continue in Q3 and Q4, with Marvell potentially reaching the $3 billion quarterly revenue target as early as the third quarter. For the full year, Marvell projects a 40% YoY revenue increase to nearly $11.5 billion, with data center revenue expected to climb about 50%. The Interconnect demand, driven by the expansion of AI clusters, is projected to exceed 70%, up from the company's earlier forecast of around 50%.

While analysts are optimistic, they caution against overvaluing Marvell's stock, given its current forward price-to-earnings ratio of 72.30 times, reflecting high expectations for future growth.