1 AI Stock With the Potential to Deliver Outsize Returns Over the Next 10 Years
Key Points
Marvell's stock has dropped by almost 30% despite revenue increasing by 51% year over year over the past nine months ended Nov. 1, 2025.
Strategic acquisitions and divestitures position Marvell to gain more market share in AI data center infrastructure.
As Marvell distances itself from its slower growth legacy business and commits to AI chips, more investors likely will notice the opportunity.
- 10 stocks we like better than Marvell Technology ›
Artificial intelligence (AI) has propelled the S&P 500 to new highs, but maximizing your returns in this hot industry involves picking individual stocks and AI exchange-traded funds (ETFs). Funds that hold a collection of AI stocks tend to outperform major indexes, with the iShares Semiconductor ETF and the Vanguard Information Technology Index Fund being notable examples.
Picking individual stocks within those funds can lead to even higher returns. Marvell Technology (NASDAQ: MRVL) fits the bill. The AI chipmaker is in both funds and looks due for a rally after dropping by almost 30% over the past year.
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Marvell freed up significant capital and resources for AI chips
Marvell has posted solid financial results despite its stock price losing value over the past year. The company delivered 37% year-over-year revenue growth in the third quarter of its fiscal year 2026 (ended Nov. 1, 2025), but a big announcement in the quarter indicates the company will have more capital and resources for AI chips in the future.
That big announcement was Marvell completing the sale of its automotive Ethernet business to Infineon for $2.5 billion in cash. This transaction gives Marvell more cash to invest in its AI chips, and the capital that went toward workers and other resources for the automotive Ethernet business segment can now go toward AI chips.
Marvell put those funds to work quickly by acquiring Celestial AI, which should help Marvell gain market share in AI data center infrastructure.
Marvell Chairman and CEO Matt Murphy forecast a strong finish to the fiscal year and accelerated demand for its AI products. Swapping the automotive Ethernet business segment with Celestial AI should result in further upside in fiscal 2027.
Revenue growth does not reflect recent stock movements
Over the past nine months ended Nov. 1, 2025, Marvell posted 51% year-over-year revenue growth, and it ended the quarter with a current ratio above 2. Those results make Marvell's stock price movement look all the more jarring over the past year.
Investors can attribute the losses to Marvell's legacy business not growing as quickly as expected. The AI business has fueled much of the revenue growth, but that should be taken as a good thing.
Marvell recognizes AI is its biggest opportunity and doubled down on it by divesting from non-AI businesses and acquiring companies that align with its AI ambitions. These strategic moves suggest Marvell can accelerate revenue growth rates even more in fiscal 2027 once Celestial AI is fully integrated.
Marvell also has the opportunity to expand profit margins, which currently sit at around 10%. During this year of growth, Marvell's net income growth rates always exceeded revenue growth rates. That is the perfect setup for long-term performance, and Marvell may realize the gains it deserves in 2026.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends iShares Trust - iShares Semiconductor ETF. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
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