Marvell Technology(US:MRVL)2025-09-26 02:32Summary of Marvell Technology Inc. Conference Call Company Overview - Company: Marvell Technology Inc - Industry: Semiconductors & Semiconductor Capital Equipment Key Points and Arguments Growth Outlook 1. Overall Growth Expectations: Management anticipates constructive growth across all end markets, particularly in the datacenter segment, which is expected to achieve at least 18-20% year-over-year (Y/Y) growth in CY26 [1][14] 2. Datacenter Segment Performance: The diversified datacenter segment, accounting for 75% of revenues, is well-positioned to grow in line with overall capital expenditure (capex) spending, projected at 18-20% Y/Y in 2026, with accelerating revenue growth expected in CY27 and CY28 [1][14] 3. AI Custom ASIC Business: The AI custom ASIC business is projected to have a baseline floor of 18% revenue growth, benefiting from the ramp of Trainium 3, indicating strong participation in Amazon's next-generation program [1][14] Partnerships and Product Development 4. Amazon Partnership: The partnership with Amazon remains robust, with visibility into multi-generational product wins and ongoing engagement on 2nm technology, which supports growth in the AWS custom AI XPU ASIC business [1][14] 5. Expansion of Design Wins: The number of multi-generational AI XPU and XPU attach wins has increased to over 20, up from 18 at the June AI day [1][14] Business Segments Performance 6. Optical Networking Business: The optical networking business is expected to grow faster than the custom business in CY26, driven by strong demand for its DSP products, which have grown to a $3 billion business, up from a $600 million revenue run rate since the Inphi acquisition [1][14] 7. Emerging Datacenter Business: The other/emerging datacenter segment is well-positioned for growth, particularly in the switching business, which has doubled to $300 million since the Innovium acquisition, with expectations of reaching approximately $500 million as the 51.2T Tbps product ramps [1][14] Financial Metrics and Stock Performance 8. Stock Repurchase Program: Marvell announced a $1 billion accelerated stock repurchase program and increased its total repurchase authorization to $5 billion, reflecting management's confidence in the company's growth profile [1][14] 9. Valuation and Price Target: The price target for December 2026 is set at $120, assuming a 33x multiple applied to projected earnings of approximately $3.60 in FY27, which aligns with the company's AI/Networking peers [1][16] Market Position and Risks 10. Market Share Concerns: Despite positive growth indicators, the stock is trading at a 5-turn discount to AI peers, attributed to investor pessimism regarding its ability to capture 20% market share within its datacenter segment [1][14] 11. Risks to Growth: Potential risks include a reversal in datacenter build-outs, competition in next-generation HDD technology, and muted spending from telecommunications providers related to 5G [1][17] Additional Important Information - Revenue Growth Projections: Revenue is expected to grow from $5.77 billion in FY26 to $9.48 billion in FY27, with adjusted EPS projected to increase from $2.85 to $3.60 during the same period [1][19] - Management Confidence: The management team effectively addressed competitive concerns and highlighted the diversified growth of its datacenter business, reinforcing their strategic direction [1][14] This summary encapsulates the key insights from the conference call, focusing on Marvell Technology Inc's growth prospects, strategic partnerships, financial performance, and market positioning.