Marvell (MRVL) Q4 2026 Earnings Call Transcript

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Date

Thursday, March 5, 2026 at 4:45 p.m. ET

Call participants

• President and Chief Executive Officer — Matthew J. Murphy
• Chief Financial Officer — Willem A. Meintjes
• Chief Operating Officer — Christopher Koopmans
• Head of Investor Relations — Ashish Saran

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Takeaways

• Revenue -- $2.219 billion in the quarter, representing seven percent sequential growth and 22% year-over-year growth, driven by the data center end market.
• Full-year revenue -- $8.195 billion, up 42% year over year, with 45% growth excluding the divested automotive Ethernet unit.
• Data center revenue -- Surpassed $6 billion for the year, growing 46% year over year and constituting 74% of total fourth quarter revenue.
• Communications and other revenue -- $567 million in the quarter, up two percent sequentially and 26% year over year, contributing 26% of total revenue.
• Non-GAAP EPS -- $0.80 for the quarter, up 33% year over year and $0.10 above the midpoint of guidance.
• GAAP EPS -- $0.46 for the quarter.
• Non-GAAP full-year EPS -- $2.84, up 81% year over year; GAAP full-year EPS was $3.70.
• Gross margin -- Fourth quarter GAAP: 51.7%; fourth quarter non-GAAP: 59%; full-year GAAP: 51%; full-year non-GAAP: 59.5%.
• Operating margin -- Fourth quarter GAAP: 18.2%; fourth quarter non-GAAP: 35.7%; full-year GAAP: 16.1%; full-year non-GAAP: 35.3%, up 640 basis points year over year.
• Operating expenses -- Fourth quarter GAAP: $744 million; fourth quarter non-GAAP: $517 million; first quarter forecast: GAAP $872 million, non-GAAP $575 million (reflecting seasonality and Celestial AI/XConn acquisitions).
• Cash flow -- Fourth quarter cash flow from operations was $374 million; inventory ended at $1.39 billion, up $374 million sequentially to support growth.
• Shareholder returns -- $2.245 billion returned in fiscal 2026 ($200 million in buybacks, $51 million in fourth quarter dividends), up approximately $1.3 billion year over year.
• Debt position -- $4.47 billion total debt, gross debt to EBITDA of 1.38x, net debt to EBITDA of 0.57x at quarter end.
• First quarter 2027 guidance -- Revenue of $2.4 billion (+/- 5%); non-GAAP EPS $0.74-$0.84; GAAP EPS $0.26-$0.36; non-GAAP gross margin 58.25%-59.25%.
• Full-year 2027 guidance -- Revenue expected to grow over 30%, approaching $11 billion, lifted entirely by accelerated data center demand; full-year data center revenue forecast to grow 40%.
• Full-year 2028 outlook -- Revenue guidance raised to approximately $15 billion, up close to 40%, adding nearly $2 billion from December's outlook; Celestial AI and XConn expected to contribute $250 million total, with non-GAAP EPS forecast at over $5.
• Data center interconnect growth -- Interconnect business now projected to grow more than 50% year over year in fiscal 2027, exceeding the prior 30% forecast.
• Custom business trajectory -- Custom business reached $1.5 billion annually and is expected to grow more than 20% in fiscal 2027, with management reaffirming a strong second-half ramp.
• AEC and retimers -- Combined revenue expected to more than double in fiscal 2027, from a base likely around $200 million.
• Capital allocation -- Divested automotive Ethernet business and redeployed proceeds into Celestial AI and XConn acquisitions, aiming at the AI scale-up networking opportunity.
• Customer concentration -- Management stresses broad product diversification within the major hyperscaler customer base, with more than 20 design wins or product sockets entering production by fiscal 2028-2029.
• Supply chain -- Chief Operating Officer Koopmans said, "we have secured the supply that we need for all the growth that Matt outlined this year, next year, and beyond."
• Technology announcements -- Introduced industry's first secure 1.6T ZR and ZR+ DCI modules powered by new 2nm coherent DSP; new 2nm 800G DSP launched for next-generation DCI modules.
• CPO/scale-up roadmap -- Targeting CPO revenue from Celestial AI to reach a $500 million annualized run rate in 2028 and $1 billion by 2029; Photonic Fabric technology highlighted as a growth driver for scale-up interconnect, with high-volume shipments targeted for next year.
• Custom XPU attach & CXL -- XPU attach business expected to double each year, potentially to $1 billion by next year, driven by design wins in NIC and CXL applications.
• Data center switches -- Switch revenue expected to exceed $600 million in fiscal 2027, up from a prior $500 million view; 100T platform sampling in the first half of the year.
• Non-GAAP operating expenses -- Expected to stay flat in the second quarter, then grow low- to mid-single digits in the third and fourth quarters, below the revenue growth rate.
• Dividend & buyback policy -- Management plans to continue returning capital via repurchases and dividends, as in prior quarters.

Summary

Marvell Technology (NASDAQ:MRVL) reported quarterly and annual record revenue and earnings, underlining data center acceleration as the core driver. Guidance for both fiscal 2027 and 2028 revenue and EPS was raised, with management disclosing major upward revisions tied specifically to faster adoption and deeper customer commitments across AI-related data center connectivity, custom silicon, and interconnect. Capital deployment focuses on strengthening the portfolio through strategic acquisitions (Celestial AI, XConn), while previous asset sales funded these moves. Expansion is supported by ongoing supply chain alignment and a broad, diversified customer engagement framework. Technology positioning includes first-to-market 1.6T and 2nm interconnect solutions, as well as a significant multiyear custom XPU and CXL attach pipeline ramping rapidly. Fiscal 2028 full-year revenue, EPS, and AI-linked growth projections were reset substantially higher, reflecting visibility from current backlog and in-production design wins poised to drive multiyear compounding growth rates.

• The combination of organic business strength and substantial pipeline from recent M&A is expected to drive rapid expansion beyond near-term guidance, with Celestial AI and XConn projected to add approximately $250 million in aggregate revenue in fiscal 2028.
• Management emphasized that forecasted growth rates depend on existing demand signals and active design execution, citing more than 20 design wins or sockets feeding sequential growth across custom and XPU attach products.
• Gross and operating margin performance outpaced revenue expansion, with non-GAAP operating margin expanding 640 basis points year over year.
• Customer concentration is mitigated by broad product family distribution within each major hyperscaler portfolio; management anticipates diversification to improve further as more programs transition to production.
• Supply chain risk was directly addressed, with the Chief Operating Officer asserting full alignment and bookings visibility enabling delivery of all planned fiscal 2027 and 2028 ramp.
• Debt ratios improved versus prior periods due to EBITDA growth, with capital returns exceeding $2.2 billion in the latest fiscal year as part of a consistent shareholder return approach.
• Product innovation milestones include initial shipments of 1.6T Coherent Light and 2nm DSP-powered DCI modules, positioning the company for continued leadership in next-generation AI datacenter infrastructure.
• Revenue mix in the data center segment is expected to shift further toward higher-value interconnect and custom solutions in the coming year, driven by rapid customer adoption and program scale-up.

Industry glossary

• PAM (Pulse-Amplitude Modulation): Advanced modulation technique used in high-speed optical interconnects (e.g., PAM4) to increase data throughput for data center links.
• CPO (Co-Packaged Optics): Integration of optical transceivers and switch ASICs in a single package to reduce latency and power consumption in high-bandwidth data centers.
• AEC (Active Electrical Cable): High-speed, short-reach, electrically driven cables used for in-rack and inter-rack data center connectivity.
• NIC (Network Interface Card): Hardware component enabling network connectivity within servers and storage appliances, increasingly custom-designed for AI workloads.
• CXL (Compute Express Link): High-speed interconnect protocol enabling efficient memory sharing and disaggregation between CPUs, GPUs, and XPUs in large-scale data centers.
• ZR/ZR+ DCI modules: Optical modules for Data Center Interconnect (DCI) providing standardized, long-reach (ZR) or enhanced capability (ZR+) pluggable solutions for linking data centers.
• XPU: Generic term for a programmable processing unit (e.g., CPU, GPU, AI accelerator, or custom silicon) used in compute-intensive applications.
• Tier 1 hyperscaler: Large-scale cloud infrastructure providers with leading market presence and purchasing influence in the global data center industry.

Full Conference Call Transcript

Matthew J. Murphy: Thanks, Ashish, and good afternoon, everyone. Let me begin by extending a warm welcome to the Celestial AI and XConn team. We recently closed both acquisitions, and the teams are working closely together with joint product roadmap discussions in full swing with customers. These highly strategic additions further strengthen our technology platform and significantly enhance Marvell Technology, Inc.’s position in the rapidly emerging AI scale-up networking market. I will provide additional detail on these acquisitions later in today's call. Now turning to our results and business outlook. In Q4 2026, Marvell Technology, Inc. delivered record revenue of $2.219 billion, reflecting 7% sequential growth. Revenue exceeded the midpoint of guidance driven by our strong demand in our data center end market.

As a result, non-GAAP earnings per share of $0.80 exceeded the midpoint of guidance by $0.10. Turning to our full-year results, fiscal 2026 was an exceptional year for Marvell Technology, Inc. Revenue grew 42% year over year to approximately $8.2 billion as reported, and approximately 45% year over year excluding the divested automotive Ethernet business. Our data center revenue surpassed $6 billion, growing 46% year over year. Performance was driven by robust demand for our interconnect, switching, and storage products along with a strong ramp in our custom business, which doubled in fiscal 2026. As we begin fiscal 2027, we are seeing very strong demand across our entire data center portfolio, with bookings accelerating at a record pace.

This robust demand is reflected in our guidance for Q1 2027, with total company revenue forecasted to grow 8% sequentially at the midpoint to $2.4 billion. Looking ahead, we expect to grow revenue every quarter this fiscal year at a similarly strong sequential rate, which would result in Q4 revenue exceeding $3 billion exiting this year. The forecast also implies that our year-over-year revenue growth rate will accelerate each quarter throughout fiscal 2027. As a result, we now expect overall Marvell Technology, Inc. revenue in 2027 to grow more than 30% year over year, approaching $11 billion. Notably, this outlook is meaningfully higher than what we communicated in our prior updates.

Some of you may recall in September 2025, during an investor call hosted by JPMorgan, we provided a fiscal 2027 revenue outlook of approximately $9.5 billion, which at that time was received positively as it was significantly higher than the market expectation. In our December 2025 earnings call, as CapEx growth forecasts continued to increase, we updated our 2027 revenue forecast to approximately $10 billion. Today’s outlook approaching $11 billion raises our forecast by almost another $1 billion. Importantly, this outlook is driven by Marvell Technology, Inc.’s organic businesses, as the recently closed acquisitions are not expected to contribute meaningfully until fiscal 2028. The increase in our overall revenue outlook is all being driven by our data center business.

Since December 2025, cloud CapEx expectations have continued to increase and we have seen our bookings continue to accelerate. As a result, we now see our fiscal 2027 data center revenue growing by 40% year over year. We expect all our key product lines in data center to be stronger than our prior outlook. Notably, we expect our interconnect business to grow more than 50% year over year, well above our prior expectation of 30% growth. For our communications and other end market, we expect 10% revenue growth in fiscal 2027.

Looking ahead to fiscal 2028, while we assume the rate of CapEx growth moderates from the current fiscal year, we expect continued robust data center revenue growth for Marvell Technology, Inc. We expect our interconnect business to significantly outpace cloud CapEx growth, our custom business to at least double year over year, and our Ethernet switching business to continue to ramp meaningfully. In addition, we expect Celestial AI and XConn to contribute approximately $250 million in aggregate revenue in fiscal 2028. As a result, we expect data center revenue in fiscal 2028 to grow close to 50% year over year. Achievement of our forecast would result in three straight years of data center revenue growth compounding at well over 40%.

For our communications end market, we continue to expect low single-digit percentage revenue growth in fiscal 2028, consistent with our prior view. So in aggregate, we expect Marvell Technology, Inc.’s overall revenue in fiscal 2028 to grow close to 40% year over year, reaching approximately $15 billion, roughly $2 billion higher than the outlook we provided in our December earnings call, and driving our non-GAAP EPS to well over $5. This outlook is based on demand we are seeing now and designs that are already in execution. As we progress through the fiscal year, we plan on remaining closely aligned with our customers as we expect them to continue to invest in AI infrastructure.

With that, I will provide more context on our numerous growth drivers across our end markets, beginning with data center. In our data center end market, we delivered record fourth quarter revenue of $1.5 billion, representing 9% sequential growth and 21% year-over-year growth. Revenue exceeded our guidance driven by increased demand across our interconnect portfolio. We achieved sequential growth across all key product lines, including optical interconnects, custom silicon, switching, and storage. Looking ahead to the first quarter, we expect our data center revenue to grow approximately 10% sequentially, including a seasonal sequential decline in on-premise data center revenue. Let me now highlight the broader trends across both our established data center and our newer growth initiatives, including recent acquisitions.

I will organize the discussion into three categories: interconnect, switching, and custom. I will begin with interconnect where we offer the industry's broadest and most comprehensive high-speed connectivity portfolio addressing scale-out, scale-across, and scale-up networking. In our scale-out PAM franchise, demand remains robust for our 800G products. We are also seeing very strong bookings from multiple Tier 1 customers for our 1.6T solutions, which entered production in Q4 2026. Reflecting this demand and our first-to-market technology leadership, we expect our 1.6T revenue to ramp very rapidly in fiscal 2027, with substantial additional growth projected in fiscal 2028.

As a result, we expect to continue to maintain leadership in the PAM market at 1.6T just like we have at every PAM generation. Marvell Technology, Inc. is the first company to productize 200 gigabit per lane technology, enabling the 1.6T transition now underway. While this generation is expected to continue to grow through the end of the decade, Marvell Technology, Inc. has already demonstrated 400 gig per lane technology and we expect that this will position us to enable the industry's subsequent transition to 3.2T once 1.6T reaches full maturity.

To support campus-wide data centers requiring longer reach than traditional PAM solutions, Marvell Technology, Inc. has introduced Coherent Light, optimized for 2 to 20 kilometer applications within a highly power-efficient envelope. We have already begun shipping first-generation 1.6T Coherent Light products and are now introducing second generation with integrated MACsec security. Turning to scale-across interconnects, a technology we pioneered with our 100G modules, we continue to lead the market with coherent 400G and newer 800G solutions. We are winning new customers and expect to supply DCI modules to all five major U.S. hyperscalers this year. We see significant long-term growth in this market, as the global data center footprint expands and bandwidth requirements between data centers continue to increase.

Industry forecasts project the DCI pluggable TAM to grow by more than five times by calendar 2030, with speeds doubling each generation and feature complexity increasing, including the integration of MACsec. To that end, earlier today, we announced our latest innovations in scale-across interconnects, including the industry's first secure 1.6T ZR and ZR+ DCI modules powered by our new 2nm coherent DSP. We also introduced a new 2nm 800G DSP which enables second-generation lower-power 800G DCI modules. DCI modules powered by these 2nm MACsec-enabled DSPs are expected to begin sampling later this year. This positions Marvell Technology, Inc. to maintain technology leadership supported by our proven expertise in large-scale manufacturing of these highly specialized and complex modules.

Now let us move to scale-up interconnects, which is an entirely new and rapidly emerging market. We are very excited about what we believe to be a massive opportunity unlocked by Celestial AI’s Photonic Fabric technology, as well as growing customer traction for our AEC and retimer solutions. As discussed last quarter, Celestial AI’s technology is expected to enable large-scale commercial deployment of CPO for scale-up connectivity starting next year. Our chiplets will be co-packaged into both custom XPUs and the scale-up switches connecting them together on both sides of the link. With the acquisition now complete, Marvell Technology, Inc.’s engineering and operations teams are fully engaged in bringing Celestial’s first-generation chiplet into high-volume manufacturing.

We remain on track for our forecast for our CPO revenue from Celestial to reach a $500 million annualized run rate in 2028, doubling to a $1 billion annualized run rate by 2029. We have seen strong interest from a broad range of customers in Celestial’s Photonic Fabric technology following the deal announcement. We look forward to updating you on our progress in the scale-up interconnect market which we believe could exceed $10 billion by 2030. In the AEC market, we have secured design wins with three Tier 1 U.S. hyperscalers and several additional customers including model builders and hardware OEMs. We are also seeing strong traction for our retimers.

As a result, we expect combined AEC and retimer revenue to more than double year over year in fiscal 2027. We continue to innovate through our Golden Cable initiative, a strategic program that delivers a complete solution, including industry-leading software and validated reference designs, enabling ecosystem partners to rapidly design and deploy AEC products at scale. Hyperscale customers benefit from access to multiple high-volume cable OEMs offering fully compatible AECs, both on the same high-performance Marvell Technology, Inc. DSP and reference design. Turning to data center switching, we delivered strong growth in fiscal 2026 with revenue exceeding $300 million driven entirely by scale-out applications.

Given sustained demand for our current 12.8T products and the strong ramp of next-generation 51.2T products, we now expect data center switch revenue in fiscal 2027 to surpass $600 million, up from the $500 million we had indicated last quarter. We are seeing strong engagement from both existing and new customers for our 51.2T and our upcoming 100T platform, which we expect to begin sampling in the first half of this fiscal year. Our 100T switch delivers industry-leading power efficiency and lower latency attributes that are especially critical for AI applications. In scale-up switching, the combination of Marvell Technology, Inc. and XConn creates a significantly larger team to address rapidly emerging UA Link and Ethernet-based opportunities.

UA Link builds on decades of PCIe ecosystem development and incorporates high-speed interface innovations from Ethernet to meet the bandwidth, latency, and reach requirements of next-generation accelerated infrastructure. XConn expands Marvell Technology, Inc.’s switch team with deep PCIe switching expertise, enabling comprehensive support to customers building next-generation AI platforms. We are fast-tracking our scale-up switch roadmap by leveraging our extensive experience in developing large reticle-size scale-out switch chips and best-in-class in-house high-performance SerDes. We remain on track to sample our UA Link 115T solutions in the second half of this fiscal year, with volume production expected in fiscal 2028. In parallel, we continue to advance the Ethernet-based roadmap with key customers.

We are able to further enhance our scale-up roadmap by enabling integration of our CPO technology from Celestial directly with our switches, delivering a purpose-built, fully optimized end-to-end optical scale-up platform. XConn also adds advanced PCIe and CXL switch solutions, another completely incremental TAM for Marvell Technology, Inc. Their PCIe Gen 6 and CXL 3.1 solution is based on a monolithic switch architecture supporting up to 256 lanes, delivering the industry's highest radix and lowest latency. PCIe switching remains foundational in compute architectures connecting CPUs to peripherals, and increasingly in AI infrastructure to connect CPUs to XPUs.

In parallel with next-generation protocols like UA Link, PCIe is also adopted for XPU-to-XPU connectivity, particularly in AI inference systems and small to medium-sized clusters. CXL is rapidly becoming central for memory disaggregation in modern data centers. We have been investing in CXL for several years, and XConn’s switching portfolio combined with Marvell Technology, Inc. CXL memory expanders creates the industry's most comprehensive CXL platform. XConn was already engaged with more than 20 customers prior to the acquisition. As part of Marvell Technology, Inc., XConn now benefits from our global sales and marketing reach and strong presence in the data center.

As a result, we expect to drive strong growth in both the PCIe and CXL switch markets over the next several years. Turning now to our custom business. This remains one of the most compelling growth drivers for Marvell Technology, Inc. In just a few years, we have scaled from zero revenue to $1.5 billion in fiscal 2026. As you may recall, the first meaningful ramp began in fiscal 2025. Fiscal 2026 marked the first full year of production for those programs, and as a result, we doubled our custom revenue year over year. We expect custom revenue to grow more than 20% year over year in fiscal 2027, higher than our prior view.

We continue to see growth from our lead XPU program this year, including a transition to its next generation. As I noted last quarter, we have purchase orders covering the entirety of this fiscal year for this next-generation program and are now ramping production. In addition, we are expecting growth to continue in fiscal 2028 from this program. We are also deeply engaged on the follow-on generation of this XPU. In addition, several XPU attach programs are ramping in fiscal 2027, including our initial CXL and NIC products. CXL demand is accelerating, partly driven by tight memory supply. Our custom CXL expanders enable customers to reuse prior-generation DRAM with new XPUs, GPUs, and CPUs, while also supporting near-memory compute operations.

A recent white paper from a leading hyperscaler on next-generation LLM inference architectures highlighted near-memory processing as a key opportunity to improve model performance. They cited Marvell Technology, Inc.’s Structera processor as an example of a CXL-enabled solution that improves programmability and simplifies system integration. This all provides a great setup for fiscal 2028. We continue to expect custom revenue to at least double year over year from three primary drivers: first, continued growth from our existing custom programs; second, multiple XPU attach programs reaching high volume, particularly in custom NIC and CXL applications.

As I mentioned last quarter, we have line of sight to revenue exceeding $2 billion by fiscal 2029 from just these two use cases, and we expect to make significant progress towards that outlook through fiscal 2028. Third, our new Tier 1 XPU program ramping into high-volume production. This program has continued to progress very well through development, and we have firm volume requirements for all of next year and are planning for high-volume manufacturing. Beyond programs already won, we are encouraged by strong new design engagements with both existing and new customers. Custom compute is proliferating across the hyperscale ecosystem with inference-optimized hardware becoming increasingly important.

We are seeing an unprecedented level of activity across multiple new engagements as hyperscalers increase their cadence of custom chip development. We are engaged in deep technical discussions on innovative new architectures and are seeing a massive opportunity on 2nm and below process technologies. Okay. Turning to our communications and other end market. We delivered fourth quarter revenue of $567 million, up 2% sequentially and 26% year over year. For the first quarter, we expect low single-digit sequential growth on a percentage basis and approximately 30% year over year.

In summary, we concluded fiscal 2026 on a strong note with revenue growing 42% year over year and non-GAAP EPS increasing 81%, roughly twice the rate of revenue growth, demonstrating the strong operating leverage in our business model. In fiscal 2026, we were very active on the M&A front, divesting our automotive Ethernet business for a double-digit revenue multiple and rapidly redeploying the proceeds into two highly strategic acquisitions. These position Marvell Technology, Inc. at the forefront of the large and incremental AI scale-up networking market. At the same time, we continued to execute our capital return program, returning $2.245 billion to stockholders through share repurchases and dividends.

So far in fiscal 2027, we are seeing strong bookings across our entire data center portfolio, with customers signaling robust demand not only for this year but for the next several years. We believe we are still in the early stages of a strong multiyear growth cycle for Marvell Technology, Inc. Our first quarter fiscal 2027 guidance represents 27% year-over-year growth at the midpoint, reaccelerating from 22% in the prior quarter. And we expect year-over-year growth to accelerate each quarter throughout fiscal 2027 with revenue exiting the fiscal year at over $3 billion in the fourth quarter.

We have raised our fiscal 2027 forecast meaningfully, and in fact, the revenue growth rate we are projecting today for fiscal 2027 is roughly double the outlook we provided just a few months ago in September. This is an exciting moment for Marvell Technology, Inc. I want to take a moment to thank our global team for staying focused despite the external noise and delivering consistent execution, which has enabled record results and positioned us to best capitalize on what we expect will be a massive AI opportunity ahead. I look forward to updating you on our progress in the coming quarters.

With that, I will turn the call over to Willem for more detail on our recent results and outlook.

Willem A. Meintjes: Thank you, Matt, and good afternoon, everyone. Let me start by summarizing our full fiscal year 2026 results which were very robust across the board. In fiscal 2026, Marvell Technology, Inc. delivered $8.195 billion, growing 42% year over year. This growth was primarily driven by AI demand in our data center end market, as well as the continuing recovery in our communications and other end markets. For the full year on a GAAP basis, our gross margin was 51%, operating margin was 16.1%, and earnings per diluted share was $3.70.

On a non-GAAP basis, our gross margin was 59.5%, operating margin was 35.3%, expanding by 640 basis points year over year, and earnings per diluted share was $2.84, growing 81% year over year. We also significantly increased capital returns to our stockholders, returning $2.245 billion through share repurchases and dividends in fiscal 2026, an increase of approximately $1.3 billion from the prior year. Moving on to our financial results for the fourth quarter of 2026. Revenue in the fourth quarter was $2.219 billion, growing 22% year over year and 7% sequentially. Our data center end market was 74% of total revenue with our communications and other end market contributing the remaining 26%. GAAP gross margin was 51.7%.

Non-GAAP gross margin was 59%. Moving on to operating expenses. GAAP operating expenses were $744 million, including stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs. Non-GAAP operating expenses came in at $517 million, in line with guidance. Our GAAP operating margin was 18.2%, while our non-GAAP operating margin was 35.7%. For the fourth quarter, GAAP earnings per diluted share was $0.46. Non-GAAP earnings per diluted share was $0.80, above the midpoint of guidance, reflecting year-over-year growth of 33%. Now turning to our cash flow and balance sheet. In the fourth quarter, cash flow from operations was $374 million.

Our inventory at the end of the fourth quarter was $1.39 billion, growing $374 million from the prior quarter. Our working capital has increased to support the significant revenue growth we are driving. During the quarter, we repurchased $200 million of our stock through our ongoing capital return program and returned $51 million to shareholders through cash dividends in the quarter. We expect to continue to return capital through repurchases and dividends. As of the end of the fourth quarter, our total debt was $4.47 billion, with a gross debt to EBITDA ratio of 1.38 times and a net debt to EBITDA ratio of 0.57 times.

Our debt ratios have continued to improve as we have driven an increase in our EBITDA. Turning to our guidance for the first quarter of 2027. We are forecasting revenue to be in the range of $2.4 billion, plus or minus 5%. We expect our GAAP gross margin to be between 51.4% and 52.4%. We expect our non-GAAP gross margin to be between 58.25% and 59.25%. Looking forward, we anticipate that the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter. We project our GAAP operating expenses to be approximately $872 million. We anticipate our non-GAAP operating expenses to be approximately $575 million in the first quarter.

This is stepping up from the prior quarter due to the typical seasonality in payroll taxes and employee salary merit increases as well as the addition of Celestial AI and XConn. The two acquisitions in aggregate are expected to add approximately $75 million to our fiscal 2027 annual non-GAAP operating expenses. We expect our GAAP other income and expense, including interest on our debt, to be an expense of approximately $51 million. We expect our non-GAAP other income and expense, including interest on our debt, to be an expense of approximately $48 million. We expect a non-GAAP tax rate of 11%.

We expect our basic weighted average shares outstanding to be 876 million and our diluted weighted average shares outstanding to be 883 million. We anticipate GAAP earnings per diluted share in the range of $0.26 to $0.36. We expect non-GAAP earnings per diluted share in the range of $0.74 to $0.84. As we look ahead to the rest of fiscal 2027, we will continue to invest in growing our business while driving operating leverage.

On a sequential basis, we expect non-GAAP OpEx to remain flat in the second quarter and then grow in the low- to mid-single digits on a percentage basis in each of the third and fourth quarters, well below the rate of revenue growth Matt provided in his remarks. We are seeing strong growth from our existing franchises in scale-out and scale-across AI, as well as custom, and we are investing to drive new revenue streams from the rapidly emerging AI scale-up market. We have entered a robust multiyear growth period and are looking forward to delivering strong earnings growth to our stockholders. With that, we are ready to start our Q&A session.

Operator, please open the line and announce Q&A instructions. Thank you.

Operator: Thank you. We will now be conducting a question-and-answer session. In the interest of time, please restrict yourself to one question only. If you have additional questions, please rejoin the queue. To assemble our roster, for participants using speaker equipment, it may be necessary to pick up the handset. Your first question comes from Ross Seymore with Deutsche Bank. Please state your question.

Ross Seymore: Hi, guys. Thanks for asking a question. Matt, thanks for all the updates on the year—well, fiscal year both this and next. Beyond the magnitudes of the revenue growth, can you just talk about the profile of it? Is the customer base broadening? People are always worried, especially in your custom business, about the concentration of it. So just wanted to get a little bit more color on the shape of the demand from a customer perspective?

Matthew J. Murphy: Yes. Thanks, Ross. Well, first of all, we are deeply engaged across the entire ecosystem, in an extremely strong position with the top four U.S. hyperscalers and then the next level. And each of them, we have a different concentration and revenue mix. But just to be super clear, if you look at this year, and you look at us driving the company to $11 billion and then you unpack things like custom, it is not that big a percentage of the total, so that is not what is driving our concentration. By design, because the top four U.S. hyperscalers spend the bulk of the CapEx, that is where the dollars are going to go.

But we are quite diversified within each of them. And some of them, we sell a different mix, obviously, of product too. But in the case of all four, within our portfolio, which I just went through—the laundry list of all the different products that we provide—we are highly diversified within each of these customers. So yes, custom is something that gets a lot of attention, but if you just look at the numbers I gave you and the context I set, it is a piece of the equation, but not all of it.

And then over time, even on the custom business, as you look out through fiscal 2028 and fiscal 2029, remember, we have 20-plus design wins or product sockets that are either in production or going into production that are going to layer in across all those as well. So the diversification is only going to get better over time. But we are very unique in the breadth of the product that we offer and the product lines we have to really serve end to end the needs of all of our key hyperscale customers.

And the last two M&As we just did really round that out nicely in terms of adding PCIe, beefing up the UA Link, and then also adding key silicon photonics capabilities.

Operator: Your next question comes from Harlan Sur with JPMorgan. Please state your question.

Harlan Sur: Yeah. Good afternoon, guys, and congratulations on the strong results. And Matt, on your custom XPU and XPU attach subsegment, you know, OpenAI recently inked a partnership with your lead XPU customer to consume, I think, something like 2 giga worth of your lead customer’s next-gen and next-next-gen XPU. So it feels like the overall demand for AI compute continues to accelerate. Right on top of that, like you said, you are ramping 15 to 20 XPU attach custom programs this year and next year.

Within your better outlook for custom this year, and with you already starting to ramp your lead customer’s next-gen XPU program, do you still anticipate a stronger second-half step-up of this XPU program, or is it more of a linear ramp through the year now? And I think you previously thought that you would exit this year with custom driving about a $2 billion sort of annualized growth rate. What does that exit run rate look like today?

Matthew J. Murphy: Yes. Thanks, Harlan. I think the first part of your question is absolutely seeing strong validation in the market for the AI compute spend and the fact that a significant portion of that continues to go to companies that are building their own XPUs. So that is a positive trend. We certainly see it. And you are right—even where we do not necessarily have the XPU, where we have XPU attach, all the XPU attach is going with XPUs where we are not even participating. So we participate across every one of those large companies and more on XPU attach.

So that is a very positive trend for us that is driving our positive outlook for sure through this year—which we said custom was going to grow faster than we thought—but more meaningfully into fiscal 2028 and 2029. And then from a linearity perspective, under the hood, we kind of give you a view of what the sequentials would look like throughout the year. But yes, custom, we have said, was going to be a stronger second half due to a program transition. That is still the case. And the type of exit rate you are talking about is certainly still intact and probably has an upward bias to it.

If you look at the exit rate we are talking about for the whole company now, we are looking at north of $3 billion. So within that, custom continues to have some real upside to it. But that is going to improve meaningfully, and the revenue growth is going to continue into fiscal 2028, which is basically those programs from the second half now having a full year.

So that is going to provide some nice growth, content increase, then layering in the XPU attach, and then layering in our new program at a new Tier 1 hyperscaler, which is in its early stages, but even the rough plug we have for them is significantly lower than actually the wafers that we are planning on starting and the material and the production plan we have with our manufacturing supply chain. So I think it is a very reasonable setup for next year with a lot of upward bias depending on if these trends continue.

Harlan Sur: I appreciate that, Matt. Thank you.

Operator: Your next question comes from Aaron Rakers with Wells Fargo. Please go ahead.

Aaron Rakers: Yes. Thanks for taking the question. I guess my first question is on the optics, the electro-optics business. I know, Matt, you have talked about in the past that your ability to kind of outgrow the pace of what we are seeing in CapEx spend. So I guess my question is, we have seen some massive up revisions in CapEx. I think most people look at that and say, hey, we are looking at, like, 60%-plus growth this year. Do you think you can grow at that level? And how do you think about the durability of that growth as we move into fiscal 2028, sorry? Thank you.

Matthew J. Murphy: Yes. Aaron, your observation is absolutely correct. And that is why even as we look at upward momentum we see in the business for this year, a big part of that change is in that electro-optics portfolio. We had been calling it kind of closer to CapEx, as we were modeling what we thought we could do this year back in the September call and then even in my December call. But now it is clearly growing more like accelerator growth and more like this sort of accelerated CapEx growth. So yes, it is growing 50%-plus this year now. And that momentum is going to continue into fiscal 2028. A couple of things are happening there.

The first is that as new XPU, GPU, etc., generations are released, we are seeing some increased concentration on the attach rate of optics. So that is a positive. You get more 1.6T, which has—just by its performance—higher ASP. So that is going to roll in. And then we just have some pretty exciting new programs happening in that area. So that business has been growing at ~50% a year—plus or minus—since we acquired Inphi and the data center stuff really took off. We see that continuing not only through fiscal 2028, but that momentum should continue beyond that. Maybe it is not the exact same magnitude, but it is significant.

We have a real head of steam on the electro-optics business at Marvell Technology, Inc.

Aaron Rakers: Thank you.

Operator: Your next question comes from Blayne Curtis with Jefferies. Please go ahead.

Blayne Curtis: Hey, guys. Thanks for taking my question. Matt, I did not want to ask on the custom business. So I think you feel very confident about the trajectory. I am just kind of curious, one, can you just help us with 2026? Because, I mean, you give us the big broad swath, but is that custom business growing 30% this year? Just want to figure out the base you are going to double. And can you just talk about that second major XPU customer—to kind of give this type of guidance—what kind of confidence do you have in the timing of that program?

Matthew J. Murphy: Sure. Yes. And I think you are talking about, just to be clear, calendar ’26—fiscal ’27 on custom—kind of what numbers are we talking? Is that the first question? The second one is the—

Blayne Curtis: Yes. Sorry. Yes. Your fiscal year. But yes.

Matthew J. Murphy: No, it is okay. Fiscal 2027, is it around 30%? And then just your confidence level on that second major XPU customer and timing as we try to layer that in to get to that double. Yes. Great. And by the way, do not feel bad. I have been in this job for ten years; I still have to translate every day between my fiscal year and calendar year. So do not feel bad. For fiscal 2027, we had been indicating after the double from last year, it would grow 20% this year. So we are saying that is north of that. I cannot give you the exact number now, but it is biased upwards.

It is just—so just take what I read before, that 20%. You can make an estimate, but higher. But not significant enough where I would give you a new number, but just say it is biased higher. So in the ballpark but higher. So then next year obviously gets a little bigger than we thought. And then the reason we are confident is we have line of sight in terms of—well, first of all, we have history. We built these large-scale custom programs before. We have done these ramps before. We have a good sense of when the product is going to go through its key milestones through NPI.

We have had very detailed discussions and alignment around the manufacturing plan and we have aligned up a corridor for fiscal 2028 for production on this that would be a lot higher than what I am indicating to you. I think we are budgeting at the moment for—is there a delay? Does it take longer? Etc. And plus, I think at the moment, it seems like a lot of folks are not really believing it is maybe going to do anything. But I think our plug is very, very reasonable for next year, Blayne, in terms of what is there.

And it would bias quite a bit higher if we could just achieve what we are planning on reserving in terms of capacity. So more to come there, but we try to call the ball as best we can. And in general, we have done a pretty good job over the years of trying to size and judge things in advance. And then usually we are pretty good, and then they bias upwards. So we will see where it lands. But I think it is not a big stretch for this custom business to double next year.

Operator: Your next question comes from Ben Reitzes with Melius Research. Please proceed with your question.

Ben Reitzes: Hey, guys. Matt, nice to see the beat and raise, and thanks for taking the question. I wanted to ask the question about what got better in a different way. I mean, if you could just unpack since December, the $2 billion—especially how fiscal 2028 got $2 billion better since December. If we can unpack that, what exactly got better? And then potentially, you know, I am going to be a little greedy. What can carry into the next year as well, calendar ’28, of those signs that you saw since then? Thanks.

Matthew J. Murphy: Yes. Thanks, Ben, and great to hear from you. Long time. So I think one is you just look at progression. The first point I would make is we try to give a view for investors to be helpful because there was a lot of concern and angst back at the end of last year. So in September, we talked about $9.4 billion-ish for this year. And then in December, we said that looks more like $10 billion, and now I am saying it is more like $11 billion. So some of that is just progression in terms of time and getting better visibility and more concrete. And then that just ripples into calendar ’27.

But on top of that, we have now got very firm requirements and understand the profile—in particular, the interconnect business. And I think we had called it very conservatively, to be frank. And I think even a few analysts last quarter kind of dinged us, saying, you are plugging your interconnect business at CapEx, but it really looks more like it should be tied to GPU/XPU—and that is really the case. So I think we are seeing that now in terms of the forecast. So that has come up quite a bit, which then again, the upward revisions we are seeing for this year then ripple into next year.

And then I would just say this is all underwritten, Ben, by extremely strong bookings and backlog layering in, and then the detailed conversations with our customers around supply planning have just given us a much more concrete view. And by the way, the other reason I think it is important—and why we felt it was important to continue to update on this metric—is that we set targets back in April ’24 for calendar ’28. We did that around some assumptions around data center market share of 20%. And those numbers looked enormous at the time we talked about it. I think you guys were there.

We were doing low billions a quarter in revenue at that time—$1 billion, $1.1 billion or $1.2 billion—when we put out this number that was like $15 billion in data center revenue in four years, and I think everyone thought we were nuts. At our June AI investor event, we said the TAM went up; that data center revenue bogey kind of moved up to, if you just did the math, more like $18 billion and change. But now you look at it and you see where we are landing in calendar ’26, and now we are sitting here in ’27—I mean, we are very much on track, actually, to those targets that we had set, Ben.

And so in a way, yes, it is some upward revisions, and that is partly because we have more data. But it actually is also validating the plan we set four years ago about what we thought we could go off and do, which were very lofty ambitions. And we are not there yet, and we have to go execute like crazy—me and the whole team. But we are very encouraged by what we are seeing, and the proof is in the pudding that we are getting in terms of the backlog, forecast, and alignment with our entire supply chain to be ready to go make that happen both this year, next year, and in calendar ’28.

Ben Reitzes: Hey. Thanks a lot, Matt.

Willem A. Meintjes: You are welcome.

Operator: Your next question comes from Tom O’Malley with Barclays. Please go ahead.

Tom O’Malley: Hey, guys. Thanks for taking my question. I think in the preamble, Matt, you talked about AEC and retimers more than doubling in the fiscal year. Could you maybe give us some perspective on the base there? And then you have been really helpful in the next few years kind of giving the contributing factors of what is a pretty impressive growth profile. Maybe talk a little bit about how much that can contribute in broader overview? Thank you.

Matthew J. Murphy: Yes. Hey, Tom. This is still an emerging area for us. So we are saying it is doubling—over doubling—this year, but it is probably in the $200 million range is what I would say. We actually think based on some of the things we are looking at, maybe that goes higher, but that just gives you a sense of the magnitude. But it is going to keep going from there. We have seen this in a lot of our emerging product areas when we get into them. Once they start doubling, they kind of keep doubling. And you know this market quite well. There is quite a bit of room for a bunch of people to participate.

So yes, we are very encouraged by what we see based on the traction we have on our products, especially in product leadership. We leverage a lot of our DSP and PAM technology in this area. We inflected when both on the retimer side and AECs moved from NRZ to PAM, and that was our conscious decision to do that. So we are earlier in the cycle because we are coming in later generations than some of the existing sockets, but we intend to really invest here in a significant way and participate. Over the long term, we see that as complementary. There is a place in the market for this, and we are going to participate.

But obviously, we made the bet when you go back to even the Inphi acquisition five years ago on optics and pluggable optics in particular, and then now with Celestial also on CPO on the scale-up side. So there is a period of time we are going to participate. I think it is going to be great. And the business is going to do well, and it leverages what we have. And I think it is going to be just part of our goal to be the end-to-end provider for our customers of all of these types of solutions—solutions from electrical to optical to silicon photonics, various reaches, various distances, various form factors.

That is what our customers are looking for. They want to have an interconnect partner that could be the one-stop shop and do it all and have high amounts of leverage on the IP so they can trust it because we do it ourselves. And also on the firmware and the software and the system implementations, they also want to make sure that they have reusability. So it has been a virtuous cycle here. Just the scale-up part relative to the scale-out is smaller, but growing rapidly. Thank you.

Tom O’Malley: Makes sense.

Operator: Your next question comes from Vivek Arya with Bank of America Securities. Please state your question.

Vivek Arya: Thanks for taking my question. Matt, I just wanted to first clarify what your XPU attach was last year and what contribution you expect in 2027 and 2028? And then kind of my more strategic question is, when we look at the pattern of your first large XPU program, you had a very strong start followed by a competition from another supplier. How would you handicap kind of your exclusivity at the large new customer you plan to start at next year? Thank you.

Matthew J. Murphy: Yes. Thanks, Vivek. Maybe I will answer the second one first. So yes, I think you are asking specifically about our newer program that would ramp next year, and we feel very good about our position. These are very deep engagements we have with our customers. We are two hands on the steering wheel on this. This is multigenerational in nature. Given the rate of innovation and the pace that the technology is moving at, it is really in everybody's best interest to plan not just one generation out, but even farther. And so we have really been able to do that, I think, across the board with our customers.

And so we feel really good about our position there and the sustainability of that. It still needs to ramp, obviously, but certainly, the CapEx envelope is out there to really consume a lot of product, and we are very encouraged by what we see from a roadmap perspective. And we are investing heavily as a company to be there across the board on all of the key attributes that these big customers care about. So I think more to come on that as well as future opportunities for the company.

But we feel very good about our position in the next few years in terms of line of sight to hitting the revenue targets that we talked about over the last couple of years and then growing beyond that. And then—oh, yes, I am sorry—then on the XPU attach, we cannot give you the exact numbers, but maybe big round numbers. And maybe we will first start with the line of sight just on the NIC and CXL I gave you, which was kind of $2 billion out in 2028. And then you layer more on that.

So—and by the way, just—you know, we had sized for everybody on the call the XPU attach TAM in the future at about $15 billion in calendar ’28. We did not break it out exactly, but we had a total market share goal of about 20% in that timeframe. So let us just call that $3 billion. We are driving in that area. So let us take a step back now. XPU attach probably in the couple hundred million ballpark—let us say last year—doubling this year, maybe over doubling again the year after. So I think by next year this thing is probably a $1 billion-type business. We will see how it all shakes out.

It is all going to happen under the hood of our custom business with XPU, but just to give you a sense, it is on a massive trajectory upward and it is in that category of kind of double-plus each year.

Operator: Your next question comes from Tore Svanberg with Stifel. Please state your question.

Tore Svanberg: Yes, thank you and congrats on the record quarter. Matt, I was hoping you could give us a bit of an update on the mix of the opto-electro business. So you talked about 1.6T already shipping, but my understanding is that 800G is definitely going to be the volumes this year. So any sense for what the mix is going to look like for fiscal ’27 between 1.6T and, I guess, 800G and even some 400G?

Matthew J. Murphy: Yes. Well, I think you got it right, first of all, and we have been saying this for a while that 800G was going to be stronger for longer, and I think that was our mantra even last year. And that is still the case for sure. But as I mentioned in the prepared remarks, we had significant shipments actually of 1.6T at the end of last year, and it is going to ramp again pretty hard this year. But 800G will still be the majority. I think it is going to take probably through—even next year, 800G is still going to be strong. So I cannot give you the exact breakout at the moment, Tore.

But part of the uplift as well in terms of just our outlook for interconnect for the year was also based on all of our customers revising up in terms of what they were going to need, but maybe a little bit more pronounced in 1.6T. And it is really ramping strong with those initial customers we had, and more will layer on throughout the year and next year. So maybe more on that later, Tore, but I am probably not in a position to give you the exact number. And also, I would say the reason why too is it has been moving around a lot.

This has been very dynamic in terms of the bookings environment and the demand environment. So I think the mix—we will have a better view of what that looks like as we progress throughout the year.

Tore Svanberg: Very helpful. Thank you.

Operator: Your next question comes from Joe Moore with Morgan Stanley. Please proceed with your question.

Joe Moore: With all the growth that you are looking at here, I wonder if you see anything on the supply chain that could be challenging for you. My sense is you have come a long way in terms of supply chain management since a couple of years ago, but just any updates there would be great.

Matthew J. Murphy: Yes. Hey, Joe. Great to hear from you. I am going to have Chris answer that, our COO. He has been knee-deep and had that job for about five years and he is knee-deep in the supply. So Chris, go ahead.

Christopher Koopmans: Yes. Thanks, Joe. Look, we have been in a tight supplier environment for anything that touches AI—advanced fabrication, advanced packaging, large body substrates—since the launch of ChatGPT. And against that backdrop, to your point, we were still able to grow the company north of 40% in total revenue last year. So we clearly have very, very good relationships with our suppliers. But I would argue that really what helps is we have been forecasting this growth for quite some time. And by giving them multiple years of visibility of what we are going to need and ramping into these numbers is really helping us.

And so I am very confident we have secured the supply that we need for all the growth that Matt outlined this year, next year, and beyond.

Matthew J. Murphy: Yep. We are in good shape, Joe. Yep. Thank you.

Joe Moore: Yeah.

Operator: Your next question comes from James Edward Schneider with Goldman Sachs. Please state your question.

James Edward Schneider: It is great to hear the increased visibility you have in the business into next year. But if I think about the guidance for $15 billion of revenue next year and $5 of earnings, roughly speaking, that is about 15% to where I see the Street consensus being for next year’s revenue, but only about half that on the earnings side. So can you maybe unpack a little bit what are the moving pieces below the top line? Is that gross margin mix or increased investments to sort of get to that—or the $5 number—just relative conservatism? Thank you.

Matthew J. Murphy: Yes. That is like a floor. It is $5-plus. You can run your own pro forma income statement. But just to give you a sense of how to think about it, on the top line, we gave you a framework, and then you can also take basically where we are going to exit this year, and you could use whatever number you want to model finally in your model, but we are saying put in $3 billion or a bit more.

And then if you actually just roll through some of the guidance we have given you already for this year on OpEx and the moving pieces on gross margin, we actually start to get to our target operating margin model exiting the year. And that probably continues through the next year is a safe assumption. So if you put in $15 billion and you put in that, it probably floats above $5. So that was not a prescriptive number or a firm number. It was just a $5-plus. People are going to have their own estimates, and you guys will come up with your own view.

But yes, no, I am not making any comment about any kind of margin changes or dilution or losing leverage at all. We are going to get leverage. We are in the mid-30s op margins right now if you look at where we were last quarter and what we are guiding, and that should float up throughout the year. And then not calling it exactly for next year, but it probably would be consistent with our exit rate of this year. So that is a simple way to think about it. So that would pop out a number above $5.

James Edward Schneider: Thanks very much for that.

Operator: And our next question is from Christopher Rolland with Susquehanna International Group. Please state your question.

Christopher Rolland: Hey, Matt. Thanks for answering the question. So mine is around kind of big picture like the CPO scale-up world. Perhaps if you could describe what it looks like for Marvell Technology, Inc. But also in your prepared remarks, you talked about integrating Celestial—it sounds like into the Innovium platform. I was wondering if there are potentially UA Link switch trays that you might be able to integrate this into as well? And just the timing around such products would be cool.

Matthew J. Murphy: Yes, great. Thanks. So yes, on the initial plan on Celestial, and where we—and just by the way, on the big picture side, our view pretty consistently for some time now has been that the deployment of CPO in scale-out would be relatively limited, especially relative to the amount of pluggable transceivers that are going to get deployed, and we can go back many, many OFCs ago, and that has been our view. And that has been the case to today for sure. And then I think on the go-forward, relatively wise, it is still the case, although you may see some of the industry.

That is not our current plan today, although we could absolutely do that and do that integration with the Celestial technology and our Innovium Teralynx products. And we have done POCs, and we have done some work there, but we will be ready to react to the market there, Chris, when it is needed. On the scale-up—and you mentioned UA Link—that is a perfect use case where that is where we see that CPO technology inflecting in a pretty big way. And Celestial brought us a pretty significant design win and engagement in that area. And that is what we are trying to drive for next year.

So with ramp next year, at the end of next year, that would be serving the scale-up application, and it would be both an integration of the Photonic Fabric chiplet into the XPU as well as on the switch side. That is the first one. There will be a whole bunch of shipments on scale-up switching that will be copper-based, and that is going to exist for some time too. But we are seeing very, very strong interest across the board for beyond the next few years of where the CPO for scale-up really starts to inflect.

And that has been our recognition over the last year or two—where that is going to happen—and that is why we did the M&A, and we brought the team on. So to sum it all up, we will be shipping next year CPO for scale-up at one large customer, and then we are working on more for beyond that. And the rest of those deployments would be still copper-based.

Christopher Rolland: Very exciting. Thanks, Matt.

Matthew J. Murphy: I think we will do one more question, and then I think we will wrap it.

Operator: Thank you. Okay, our last question then will come from Mark Lipacis with Evercore ISI. Please state your question.

Mark Lipacis: Great. Thanks for taking my question, and congrats on the great quarter. Matt, I am wondering when you look at these AI systems that your customers are building, it sounds like the way you are talking about it that there is a bigger bottleneck on the connectivity side than the processor side. And so that would be the part one of the question. And if you agree with that, what is the argument for why not shift your processor resources to focus more on connectivity? It seems like your lead is a lot more obvious on the connectivity side. It is a higher-margin business.

If that is where the bottleneck is, it seems like there is a higher chance to add more value, get paid for that value, and by contrast, the processor side sounds like it is quite noisy on the competitive front. And I think you guys probably get dinged on your multiple because of that noise. And so what is the rationale for not doing something like that? Thank you.

Matthew J. Murphy: Yes. Hey, thanks, Mark. It is a valid question. So first of all, on the interconnect side—on your first part of your question—I am not sure what is more of the bottleneck or not. I know for sure the interconnect is a bottleneck, but you could also argue industry-wide there is a lot more to do on the processing side. But just to be clear, we are absolutely investing to win on interconnect. We are not trading anything off there. We are going all in to make sure that we are the leader here. And that is why you can even see when we did our M&A moves last year, we put all that towards that market.

I would say, though, at the same time, we are in the custom business. You have to break it into two pieces. On the XPU attach side, obviously, that is more margin-rich and leverages a lot of the Marvell Technology, Inc. IP and technology we have. And those typically are our chips that we do. And we have made quite a nice business out of that. And then on the XPU side, we want to be a big-time supplier to our customers. We do get strategic advantage in being in that market though, Mark, which was actually even a reason—looking all the way back to Avera when we acquired it out of GlobalFoundries back in 2019.

One of the reasons that I wanted to do that acquisition and get Marvell Technology, Inc. into custom—I never envisioned it would be this significant a business for us. Let us be clear. Back in 2019, we were not thinking that we were going to buy an asset for $650 million, and it was going to open up a $50 billion TAM. But it did. And one of the strategic rationales that I had for that deal was that it would put Marvell Technology, Inc. in a product area where we had to be at the bleeding edge.

We had to be at the bleeding edge on nodes, packaging, IP development, and it was a tip-of-the-spear type of product line that I felt would be really good for us to really have a driving force to keep Marvell Technology, Inc. best in class on technology. Because at that time, we were making the move from fast follower to trying to be a technology leader. Now we are in that business. I agree with you it has got a lot of noise around it, and it has got a lot of controversies over the last year and all the different things that have gone on. Maybe it has affected our multiple.

But the fact of the matter is, we are in that business. Our customers are counting on us. We have grown that business from zero to $1.5 billion. It is going to grow again this year. It is going to double the year after. And it is going to be a significant revenue growth driver for Marvell Technology, Inc. So I am not compromising anything on the rest of the portfolio to be in that business. And remember as well, that business also gets significant funding and contribution from our customers who pay us NRE and put their commitment in to make sure that those programs are successful.

So we do get underwritten in terms of the support to go do them. And so at this point, I am in the AI market. I have the full portfolio. I am going to follow what my customers want me to do. And I am going to ignore the noise. If you actually look at last year, and all the different things that came out and all the different noise that was out there, it was all wrong. You had analysts retracting notes. You had articles that were not even accurate at all. Honestly, it was all noise. Look at our results that we are guiding. Look at our outlook for this year. Look at our outlook for next year.

Do you see me blinking? You do not. So yes, we are in the business. We are going to be in the business. Our customers want me to be in this business. And we are going to drive a major significant revenue company at Marvell Technology, Inc. I am very fired up on this topic. Thank you, Mark.

Mark Lipacis: Thanks, Matt.

Matthew J. Murphy: You are welcome. Alright. Ashish, wrap it. Go for it. Yes. I have a couple of closing statements. That was not it by the way, everybody. Alright. So first, thank you everybody for joining the call. Appreciate the interest in the company. It is always fun. Look, our business is on a very strong trajectory. I mentioned in my prepared results we had record design wins over the past year. The team did a great job. We are seeing record demand. We are on track to grow our data center revenue at or above 40% for the third straight year.

And by the way, if I go back four years, five years, ten years, this business has been growing at 35%, 40%, 45% for a very, very long time and it is going to continue to do that. For next year, we are looking at that growth accelerating closer to 50% next year. And we are driving the company to try to get this company to $15 billion in revenue next year. I have been doing this job for ten years. The team’s been incredibly dedicated, and we have this massive opportunity in front of us.

So as I said to Ben, who asked one of the great questions, we set some very ambitious targets for the company for calendar ’28, fiscal 2029, almost two years ago. It looked crazy. We are on track. We are on track to achieve the goals that we set. This is the start of it. We are going to continue to update you on the progress of the company. And I want to end by just thanking all the Marvell Technology, Inc. employees for your focus, your commitment, and your commitment to our customers to drive the execution they are looking for.

Our goal is to make Marvell Technology, Inc. one of the big winners in this once-in-a-lifetime episodic AI infrastructure build-out. So thanks, everybody, for your interest in the company. I will see a bunch of you on the East Coast in New York next week.

Ashish Saran: Thank you.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. Please disconnect your lines and have a wonderful day.

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