Nvidia’s Growth Momentum in Question: Is Marvell Technology the Next AI Stock to Watch?
As we delve into the world of artificial intelligence (AI), it’s impossible to overlook the staggering growth of Nvidia (NASDAQ: NVDA) in 2024. The semiconductor titan has seen its share prices surge over 183% this year alone. However, as impressive as these numbers are, investors are starting to question whether Nvidia can sustain this extraordinary growth over the long haul.
Despite Nvidia’s recent reports showcasing better-than-expected figures and optimistic guidance, there has been a noticeable dip in its stock price. The company announced a remarkable 94% year-over-year revenue increase for the third quarter of fiscal 2025, amounting to $35.1 billion, while earnings soared by 103% to $0.81 per share. Yet, the revenue forecast of $37.5 billion for the upcoming quarter indicates a slower anticipated growth rate of 70%, which is raising eyebrows among Wall Street analysts.
Moreover, the launch of Nvidia’s Blackwell processors has introduced added pressure on profit margins, hampering investor confidence even further. While Nvidia possesses the potential to overcome these hurdles, many who missed the recent rally are eyeing Marvell Technology (NASDAQ: MRVL) as an attractive alternative within the AI space.
Marvell Technology: A Rising Star
Marvell Technology recently reported its fiscal 2025 third-quarter results, and the numbers are promising. The company recorded a 7% year-over-year revenue increase, reaching $1.52 billion—outperforming the analysts’ expectations of $1.46 billion. Its adjusted earnings rose to $0.43 per share, slightly above the anticipated $0.41.
The heart of Marvell’s growth story lies within its data center segment, which constitutes a staggering 73% of its revenue—up from just 39% the previous year. Remarkably, this segment saw nearly double-year-over-year revenue, surging to $1.1 billion and compensating for declines in other areas like enterprise networking and consumer products.
What Sets Marvell Apart?
One of the key factors driving Marvell’s success is its flourishing demand for custom AI processors and optical networking solutions. The company is poised for continued growth, as indicated by its revenue guidance of $1.8 billion for the upcoming quarter, reflecting a robust 26% increase from last year. Analysts had a more conservative estimate of $1.65 billion, highlighting Marvell’s impressive positioning in the market.
Marvell’s CEO, Matt Murphy, emphasized the significant role that demand for custom AI processors played in the company’s outstanding performance during the last quarter. Management is confident of exceeding its full-year AI revenue target of $1.5 billion, projecting sales to reach $2.5 billion in the next fiscal year. Some analysts even expect this figure to climb up to $3 billion, showcasing the optimistic outlook for Marvell’s AI business.
The Future of Custom AI Chips
As cloud computing companies seek to reduce their dependency on Nvidia, Marvell stands out as a leading designer of custom chips—catering specifically to this growing need. With the market for custom AI chips projected to reach $45 billion by 2028, compared to an estimated $10 billion this year, Marvell’s strategy appears well-timed to capitalize on this evolution.
Additionally, the anticipated revenue opportunity of $26 billion in data center switching and interconnect services further underscores the enormous potential that AI technologies hold for Marvell. With a forecasted total revenue of $5.75 billion for fiscal 2025, marking a modest increase of just 4% from 2024 levels, all eyes are on fiscal 2026, with expectations for a more robust 31% growth on the horizon.
Conclusion: A Look Ahead
In conclusion, while Nvidia has set the bar high with its staggering growth, Marvell Technology emerges as a compelling alternative for investors looking for a more reasonably valued AI-focused stock. If Marvell can continue to deliver on its growth projections, it may well provide returns that exceed current expectations.
The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.
