Fund manager’s bold words on Marvell stock turn heads

Perhaps the most surprising part of Marvell Technology  (MRVL) 's earnings is that it didn’t surprise investors.

The AI semiconductor company lost nearly 20% of its market value on March 6 even as its fiscal-fourth-quarter results beat Wall Street's expectations.

Marvell reported adjusted earnings per share of 60 cents, topping the analyst consensus estimate of 59 cents. Revenue grew 27% year-over-year to $1.82 billion, above analysts' estimate of $1.8 billion.

"We are well positioned for a strong start to fiscal 2026," Chief Executive Matt Murphy said in a statement. "We expect first-quarter revenue growth of over 60% year-over-year at the midpoint of guidance, and we anticipate strong revenue growth for the full fiscal year."

During the earnings call, Murphy said that the Santa Clara, Calif., company's artificial intelligence revenue for fiscal 2025 ended Feb. 1 was substantially above the $1.5 billion target laid out last April. For the current year, he expects Marvell's AI-related revenue to surpass $2.5 billion.

Marvell stock under pressure

Last year, Marvell shares surged 83% on strong demand for its AI chips and optimism about its growth in data centers.

In December the company unveiled a five-year partnership with Amazon Web Services  (AMZN)  to scale its Trainium AI chips and other custom computing solutions.

But with China’s budget-friendly AI model DeepSeek raising questions about high semiconductor spending and with concerns about the Trump administration's tariff threats weighing on the market, investors apparently needed a bigger earnings surprise.

Marvell’s peer chipmakers, Broadcom and market leader Nvidia, fell more than 5% on March 6.

Marvell stock is down 33% year-to-date, while Nvidia and Broadcom are down 17% and 22%, respectively.

Veteran fund manager upgrades Marvell stock

Several analysts have trimmed their price targets on Marvell.

Barclays cut its price target from $150 to $130 and Wells Fargo lowered its estimate to $120 from $140. KeyBanc and Stifel set their targets at $115.

Meanwhile, Loop Capital upgraded Marvell shares to buy from hold with a $110 price target. Marvell traded around $73 on March 6.

"Even at those levels, based on where MRVL shares will start trading on Thursday, it implies more than 50% upside and as much as 75% with Barclays's new target," the veteran Wall Street fund manager Chris Versace said on TheStreet Pro.

Versace, whose career began in the 1990s, upgraded Marvell shares to a buy now rating from stockpile. He took a cautious stance with his price target, cutting it to $115 from $130.

Wall Street's target-price cuts "are likely to bring some added pressure on MRVL shares," he said but added that he looks to capture the full benefit of Marvell’s ramping custom-AI business.

Versace pointed to a possible rebound in Marvell’s next two largest revenue drivers.

The first key indicator will be Taiwan Semiconductor’s  (TSM)  February revenue report, which could reconfirm Marvell's market expectations. Taiwan Semiconductor is the world’s largest contract chipmaker and a major supplier for Nvidia and Marvell.

Meanwhile, tech giants at the recent Morgan Stanley TMT conference have reinforced expectations for major AI and cloud infrastructure spending.

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Microsoft  (MSFT)  said it expected a better balance between AI and cloud demand and supply by the end of June. Alphabet  (GOOGL)  reiterated plans to spend $75 billion this year on data centers, servers and networking equipment. Meta  (META)  also reiterated its $65 billion spending plan, with much of it on AI infrastructure.

Versace first bought Marvell shares in April 2023 and last added to his position on Jan. 27. His average return on the stock is 42.51%. 

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