Buy Marvell Technology as a Potential Dark Horse of AI Chips in 2026

Core Insights - Marvell Technology Inc. reported strong third-quarter fiscal 2026 earnings, with EPS of $0.76, exceeding estimates by 1.3%, and total revenues of $2.08 billion, surpassing estimates by 0.61% [1][11] Financial Performance - Revenues grew 36.8% year over year, driven by data center growth and recovery in enterprise networking and carrier infrastructure markets [3] - Data center revenues reached $1.52 billion, up 37.8% year over year and 1.8% sequentially, contributing 73.2% of total revenues [4] - Enterprise networking revenues increased 57% year over year to $237.2 million, accounting for 11.4% of total revenues [5] - Carrier infrastructure revenues surged 98% year over year to $167.8 million, representing 8.1% of total revenues [5] Strategic Positioning - Marvell is positioned as a key player in high-performance computing with custom AI silicon and electro-optics products, supported by partnerships with leading hyperscalers [6] - The acquisition of Celestial AI, expected to close in Q1 fiscal 2027, aims to enhance Marvell's capabilities in next-generation optical interconnects [7][9] Future Outlook - Marvell provided strong revenue guidance for Q4, expecting revenues of $2.20 billion, reflecting an 18.52% year-over-year improvement [12] - Projected non-GAAP EPS for Q4 is $0.79, indicating a 30% year-over-year increase [13] - The company anticipates continued growth in data center revenues driven by accelerating AI demand [12] Growth Projections - Expected revenue and earnings growth rates for the next fiscal year are 15.3% and 18.9%, respectively, with a long-term EPS growth rate of 38.2% compared to the S&P 500's 16.1% [14] Valuation Metrics - Marvell currently has a forward P/E of 32.8%, lower than the industry average of 34% [16] - The stock has experienced a decline of over 11% year to date and is trading at a 21.4% discount to its 52-week high [16] Market Position - Strong growth in data center, enterprise networking, and carrier infrastructure revenues, along with the Celestial AI acquisition, positions Marvell as a potential dark horse in the AI infrastructure sector [18]