Summary of Conference Call Company Overview - The conference call features Fabrinet, a company involved in IT hardware and communications equipment, with a focus on optical and transceiver manufacturing. Key Industry Insights Telecom and Data Center Interconnect (DCI) - Fabrinet has recently separated DCI from its telecom reporting to provide clearer visibility on growth, driven primarily by the Datacom sector [4][14] - DCI products, particularly 400ZR and 800ZR, are experiencing strong growth, with five main customers contributing to this segment [4][5] - The demand for DCI is robust, with expectations for sustainable growth over the coming years [15][14] - Traditional telecom business is growing but at a more stable rate compared to the exponential growth seen in DCI [20][24] High-Performance Computing (HPC) - Fabrinet has initiated a new HPC category, primarily serving AWS, with a revenue of $15 million from qualification volumes [28][30] - The company aims to establish a cost-competitive solution in the HPC market, with potential for significant growth [31][30] - The HPC business is expected to ramp up, with plans for additional product offerings beyond PCBAs [100][105] Capacity Expansion - Fabrinet is constructing Building 10, which will add $2.5 billion in revenue capacity, with a current run rate of $4.5 billion [39][40] - The new facility will be flexible, allowing for quick repurposing based on customer needs [41][44] - The capital expenditure for Building 10 is approximately $130 million, funded from existing cash reserves [45][46] Datacom Demand - Demand for transceivers in the Datacom sector is described as insatiable, particularly with the rise of AI data centers [69][70] - Fabrinet is producing advanced transceivers (200G, 800G, and 1.6T) but faces component shortages that limit production capacity [71][73] - The company is exploring opportunities with various customers, including traditional companies and hyperscalers [78][79] Automotive Sector - Fabrinet's automotive business is stable, with growth in EV charging infrastructure and LiDAR technology [94][95] - The company has captured a significant share of the LiDAR market, positioning itself for future growth as the technology gains traction [95] Financial Performance and Strategy - Fabrinet aims for a gross margin range of 12.5%-13%, with low operating expenses around 1.6%-1.7% of revenue [93][94] - The company has a strong financial position with no debt and approximately $1 billion in cash, allowing for self-funded growth [45][46] - Fabrinet's growth strategy focuses on maintaining a compound annual growth rate of 16% over the past decade, with plans to continue this trend [130][130] Additional Considerations - The company emphasizes the importance of performance and customer satisfaction in securing additional business opportunities [106][107] - Fabrinet is committed to long-term planning, utilizing an eight-quarter rolling revenue forecast to guide its growth strategy [129][130] - The company is open to diversifying its product offerings beyond optical solutions, depending on customer demand [85][86]

Core Viewpoint - JP Morgan analyst Harlan Sur maintains an Overweight rating on Marvell Technology, Inc. with a price forecast of $130, citing strong market leadership in optical connectivity and solid growth outlook in AI/Networking [1] Group 1: Earnings Expectations - Marvell is set to report earnings, with expectations of continued volume ramp from Amazon's Trainium 2 ASIC and Google's Axion ARM CPU programs, alongside strong demand for 800G products and initial ramp of 1.6T optical DSPs [2] - The analyst anticipates April quarter results of $1.875 billion (up 3% Q/Q) and July quarter guidance of over $2.00 billion (up 7% Q/Q), driven by data center growth and cyclical improvements [3] Group 2: AI and Optical Business - Marvell's AI ASIC MAIA Gen 2-3nm program is on track for ramp-up in 2026, with solid orders and shipments for 800G PAM4 optical DSPs and increasing ramp of 1.6T DSPs expected in the second half of the year [4] - The company is projected to drive $4 billion in AI revenues this year (ASICs + networking), representing over 2x year-over-year growth, with a strong growth profile extending into 2026 [5] Group 3: Automotive and Custom Data Center - The divestiture of the automotive business, expected to close in 2025, will create a revenue headwind of $225-$250 million in fiscal year 2026 but is expected to enhance Marvell's earnings power by $0.05-$0.10 [6] - The custom data center and AI ASIC pipeline is continuing to expand, indicating ongoing growth potential [6] Group 4: Stock Performance - Marvell's stock was trading higher by 5.69% to $64.15 at the last check [6]

Core Viewpoint - Marvell's fiscal year 2025 results and fiscal year 2026 Q1 guidance slightly exceeded analyst expectations, yet the stock price dropped over 18% post-earnings announcement [1] Group 1: Earnings Performance - Fiscal year 2025 Q4 total revenue reached $1.82 billion, a quarter-over-quarter increase of 20% and a year-over-year increase of 27%, with data center revenue contributing 75% of total revenue [2][10] - Non-GAAP EPS for Q4 was $0.60, beating the consensus estimate of $0.59 by $0.01 [4] - Q1 guidance projects revenue of $1.88 billion (+/- 5%), slightly above the consensus of $1.87 billion, and non-GAAP EPS of $0.61 (+/- $0.05), also above the consensus [4] Group 2: Market Concerns - Analysts express concerns over potential slowdowns in spending on AI infrastructure by major hyperscale companies, which could impact data center revenue growth [2][5] - There are fears that competitors, possibly Broadcom, may capture market share from Marvell by securing contracts with hyperscale clients [2][8] - The S&P 500 index has seen widespread selling due to inflation concerns stemming from new government tariff policies, leading to a cautious outlook on Marvell's stock [2] Group 3: Revenue Breakdown - Data center revenue for Q4 2025 was $1.3658 billion, showing a quarter-over-quarter increase of 24% and a year-over-year increase of 78.5% [6] - Networking revenue for Q4 2025 was $171.4 million, with a quarter-over-quarter increase of 13.6% but a year-over-year decline of 35.3% [6] - Consumer segment revenue is expected to decline by 35% in Q1 2026, following a 38% year-over-year decline in Q4 2025 [10] Group 4: Future Outlook - Management anticipates a slowdown in revenue growth rates to single digits for the next quarter, contrasting with the double-digit growth seen in the previous two quarters [3][10] - The CEO indicated that revenue from a key hyperscale client is expected to grow in fiscal years 2026 and 2027, despite the current early-stage relationship and potential risks of client turnover [8][12] - The company reported a record operating cash flow of $1.68 billion for fiscal year 2025, a year-over-year increase of 22.6% [12] Group 5: Valuation and Investment Considerations - The recent sell-off has brought Marvell's expected P/E ratio closer to Broadcom's 29 times, suggesting that the stock may no longer be overvalued compared to its direct competitors [13] - Strong demand is noted in the optical business driven by 800G PAM and 400ZR products, with the next-generation 3nm 1.6T PAM DSP expected to ship in the second half of fiscal year 2026 [13][14] - Despite risks associated with reliance on a hyperscale client and potential spending slowdowns, the attractive valuation and strong product demand may present buying opportunities for traditional value investors [14]