Key Takeaways Marvell's non-GAAP operating margin rose 870 bps YoY to 34.8% in Q2 fiscal 2026.EPS surged 123% YoY, outpacing revenue growth as cost cuts boosted leverage.AI chip demand and 2.5D packaging platform drive Marvell's next-generation expansion.Marvell Technology’s (MRVL) non-GAAP operating margin expanded a whopping 870 basis points year over year, marking 34.8%. On its second-quarter fiscal 2026 earnings call, the company highlighted that non-GAAP earnings per diluted share rose 123% year over y ...

Core Insights - Marvell Technology (MRVL) reported strong second-quarter fiscal 2026 results, driven by growth in custom AI silicon and electro-optics, leading to increased data center revenues [1][2] - The company experienced a recovery in its Enterprise and Carrier Infrastructure businesses due to inventory normalization and advanced node migration among customers [1] Financial Performance - MRVL's second-quarter fiscal 2026 earnings were 67 cents per share, a 123.3% increase year over year and an 8.1% increase sequentially, attributed to higher revenues and effective cost management [2] - Revenues for the second quarter reached $2.01 billion, reflecting a 58% year-over-year growth [2][11] - The gross margin fell to 59.4%, impacted by higher chip costs and competition [11][15] Data Center Segment Growth - The data center segment grew 69.2% year over year to $1.49 billion in the second quarter of fiscal 2026 [4][11] - Growth was driven by custom XPUs, electro-optics interconnect products, and next-generation switch divisions, particularly in AI computation and networking [5][7] - MRVL's collaboration with Microsoft Azure and the launch of new power solutions contributed to this growth [6] Market Position and Challenges - Marvell Technology is positioned as a key beneficiary of the accelerating AI adoption across industries, with a projected revenue growth rate of 41% year over year for fiscal 2026 [7] - Despite strong top-line growth, the low-margin nature of the AI-focused custom silicon business is affecting the bottom line [8][9] - Competitive pressures from semiconductor giants like Broadcom, AMD, and Micron Technology are intensifying, leading to increased investment in sales, marketing, and R&D [12][15] Valuation and Stock Performance - MRVL's shares have declined 41.5% year to date, contrasting with a 16.5% growth in the Zacks Electronics - Semiconductors industry [16] - The company trades at a forward price-to-sales ratio of 6.24X, which is lower than the industry's average of 8.64X [17] Conclusion - Marvell Technology's strong earnings reaffirm its leadership in AI-driven computing, with robust data center revenues and recovering infrastructure businesses [18] - However, concerns regarding valuation, macroeconomic headwinds, and competitive challenges persist [18]