Marvell Stock Drops 15% as the Artificial Intelligence (AI) Chipmaker's Guidance Disappoints Investors

Core Viewpoint - Marvell Technology's stock dropped 14.9% after the release of its Q4 fiscal year 2025 earnings report, despite revenue and earnings being in line with Wall Street estimates, primarily due to investor disappointment regarding guidance [1][2]. Financial Performance - Q4 fiscal year 2025 revenue was $1.82 billion, a 27% increase from $1.43 billion in Q4 fiscal year 2024 [3]. - GAAP operating income improved from a loss of $33.3 million to a profit of $235.2 million [3]. - GAAP net income flipped from a loss of $392.7 million to a profit of $200.2 million [3]. - Adjusted net income rose by 32% from $401.6 million to $531.4 million [3]. - GAAP earnings per share (EPS) changed from a loss of $0.45 to a profit of $0.23, while adjusted EPS increased by 30% from $0.46 to $0.60 [3]. Market Performance - The data center segment generated $1.37 billion in revenue, reflecting a 78% year-over-year increase, driven by strong demand for AI-related products [6][10]. - Other segments like enterprise networking and carrier infrastructure saw declines of 35% and 38% year-over-year, but experienced sequential growth of 14% and 25%, respectively [7]. - The automotive/industrial segment grew by 4% year-over-year and 3% sequentially, while the consumer segment continued to decline [8]. Management Commentary - CEO Matt Murphy highlighted strong growth in the data center market and a recovery in multi-market businesses, with custom AI silicon programs entering volume production [10][11]. - The company anticipates first-quarter revenue growth of over 60% year-over-year for fiscal year 2026 [11]. Guidance - For Q1 fiscal year 2026, Marvell expects adjusted EPS between $0.56 and $0.66, with revenue projected at $1.87 billion, aligning with analyst consensus estimates [12][15]. - The company’s outlook reflects cautious optimism amid volatile geopolitical and macroeconomic conditions [13]. Investment Outlook - Marvell's stock is recommended for growth investors, with robust demand expected from the data center market as tech companies expand infrastructure for AI capabilities [14].