50% Upside For MRVL Stock?

Core Insights - Marvell Technology Inc. reported Q1 fiscal 2026 earnings of $0.62 per share on revenues of $1.9 billion, slightly exceeding analyst expectations of $0.61 and $1.88 billion respectively, despite a 3% decline in stock price after hours and a 43% drop since the beginning of the year [1][4]. Financial Performance - The company experienced a significant year-over-year revenue growth of 63%, driven by a 76% increase in core data center sales, reaching $1.44 billion, largely due to rising demand for custom AI chips [4]. - Adjusted gross margin decreased by 240 basis points year-over-year to 59.8%, but earnings per share increased by 158% from $0.24 in the same quarter last year [4]. - Future sales for Q2 are projected to be around $2.0 billion, aligning with market expectations [4]. Valuation Analysis - Marvell's stock is currently trading at approximately $62 per share, with a price-to-sales (P/S) ratio of 8.3 and a price-to-earnings (P/E) ratio of 32, both significantly lower than their three-year averages of 10.4 and 42 respectively [2]. - Analysts project sales growth of 42% this year and an additional 20% next year, with earnings expected to rise by 2.3 times during this period, suggesting a potential upward adjustment in valuation multiples [5]. Strategic Positioning - Marvell is focusing on the AI sector, particularly through the development of application-specific integrated circuits (ASICs) for hyperscaler data centers, which offer advantages over general-purpose GPUs [6]. - The company has strengthened partnerships with major AI stakeholders, including Amazon Web Services, to expand its semiconductor offerings [6].