Why Marvell Technology Rallied in March

Shares of chipmaker Marvell Technology (NASDAQ: MRVL) rallied in March, rising 21.3% according to data from S&P Global Market Intelligence.

Marvell had a busy month, reporting fourth-quarter earnings that beat expectations. Later in the month, the company also announced a landmark investment from and product collaboration with Nvidia (NASDAQ: NVDA).

A beat, strong guidance, and a boost from Nvidia

In its fiscal fourth quarter, Marvell reported a 22.1% jump in revenue to $2.2 billion, with adjusted (non-GAAP) earnings per share rising 33.3% to $0.80. Management also guided for a strong 9% sequential jump in revenue in the first quarter, with a guide for $0.79 in adjusted EPS. The reported results and guidance both handily beat analysts' expectations.

On a more granular level, Marvell management said it expected data center revenue to grow 40% in fiscal 2027 (its current fiscal year), which is higher than the average analyst estimate of 25%. Over the past year, there has been some consternation about whether Marvell has lost market share with its largest customer, Amazon, for Amazon's custom Trainium chips.

However, the forward guidance indicates that the all-important XPU and XPU-attach business, in which Marvell provides crucial IP for custom AI chips, is alive and well. Notably, Marvell has also diversified its customer base, adding Microsoft to its roster. Microsoft unveiled its updated XPU, the Maia2 chip, back in January. Additionally, the advent of agentic inference could support higher-than-expected growth in the networking part of AI infrastructure, where Marvell excels.

Image source: Getty Images.

The networking factor is likely what led to the late-month announcement that Nvidia will invest $2 billion in Marvell. The investment also includes a product partnership.

Typically, these days, AI infrastructure is either Nvidia-based, or companies deploy their own custom XPU chips and Ethernet technology. However, it now appears Nvidia is looking to integrate with Marvell, in order to enable heterogeneous infrastructures that can mix XPUs with Nvidia's other technologies, such as NV-Link, its Vera CPUs, or even hybrid Nvidia GPU-plus-XPU architectures.

The press release also mentioned a collaboration on silicon photonics. This is important because silicon photonics may replace copper-based networking in the next generation of AI data centers. Nvidia's current NV-link fusion is based on copper, so it appears Nvidia is seeking Marvell's networking expertise to develop new optical networking products built on Nvidia technology in the future.

Over the past year, Nvidia has been making similar types of deals with other semiconductor companies that might have been considered competitors, but have instead chosen to collaborate with the chip giant. These announcements are typically met with a jump in the target company's shares, as investors appear to appreciate the vote of confidence and anticipate more future growth, offsetting concerns over dilution.

Marvell should remain an AI winner

Marvell had a difficult 2025, but its resilient results have shown it to be a beneficiary of the AI infrastructure build-out. It's also possible that things could get even better for Marvell in the age of agentic AI inference. In these applications, AI agents will be constantly communicating with large language models in data centers and with each other. That will require a lot of networking, which plays to Marvell's strengths.

Marvell is no longer as cheap as it was at times last year, but at 27 times this year's earnings estimates, the stock is still buyable for those enthusiastic about the networking growth prospects of generative AI.

Billy Duberstein and/or his clients have positions in Amazon and Microsoft. The Motley Fool has positions in and recommends Amazon, Marvell Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.