Nvidia CEO Jensen Huang Believes That Marvell Technology Could Become a $1 Trillion Company. Here's Why He Is Right

Shares of chip designer Marvell Technology (NASDAQ: MRVL) jumped by a whopping 33% on June 2, and Nvidia CEO Jensen Huang was the reason behind this massive surge.

According to Huang, Marvell will join the trillion-dollar market cap club. That seems like an ambitious statement at first, given that Marvell currently has a market cap of almost $230 billion. However, a closer look at the problem that Marvell is solving in the artificial intelligence (AI) infrastructure ecosystem will reveal why the Nvidia CEO is bullish about the company's prospects.

I won't be surprised if Marvell eventually becomes a trillion-dollar company. Let's look at the reasons why.

Image source: The Motley Fool.

The Nvidia CEO believes that Marvell Technology is poised to benefit from the next AI infrastructure bottleneck

Speaking at COMPUTEX Taipei, a technology conference held in Taiwan, Huang noted that the shortage of memory chips has created three trillion-dollar companies lately. He was referring to Samsung, SK Hynix, and Micron Technology, which have seen their market caps hit $1 trillion amid phenomenal revenue and earnings growth.

These companies have been benefiting from the incredible demand for memory, which solves an important bottleneck in AI data center chips. Large AI models and inference applications need huge amounts of memory and bandwidth to ensure that AI accelerators don't sit idle. Faster and larger memory means that AI chips can be consistently fed with huge amounts of data to seamlessly handle AI workloads, which explains why chip designers have been equipping their chips with more memory.

As a result, a massive amount of memory chips is going into data centers. Their demand is so strong that memory chips are expected to be in short supply until 2028. So, the favorable demand and pricing environment that's driving phenomenal growth at the three memory companies is here to stay, and that's likely to send their stocks significantly higher.

Marvell designs custom AI processors, known as application-specific integrated circuits (ASICs), storage controllers, and optical networking components, including data center switches, Ethernet controllers, and data center interconnect (DCI) optical modules. These components are experiencing strong demand due to their role in the AI infrastructure ecosystem.

While custom AI processors help hyperscalers run inference workloads cost-effectively, the optical networking and DCI components ensure that enormous amounts of data can be moved quickly in data centers and chip clusters. As a result, AI accelerator chips, such as graphics processing units (GPUs), won't be sitting idle while waiting for data.

So, fast connectivity plays a mission-critical role in scaling up AI infrastructure. That's why Huang notes that connectivity is the next bottleneck in the AI infrastructure space. The good news is that Marvell is already capitalizing on this bottleneck. As pointed out by CEO Matt Murphy on the latest earnings call:

Now in the early stages of generative AI, the primary focus was on addressing compute and memory bottlenecks. As more complex architectures such as reasoning models, and mixtures of experts have begun to deploy, the role of networking has become significantly more important. And this is a key driver of the increased demand we are seeing today for our scale out networking products.

Murphy added that he anticipates significant expansion in networking demand. What's worth noting is that the demand for the optical networking components that Marvell designs is already exceeding supply. According to McKinsey, the supply of 800-gigabit-per-second (Gbps) optical transceivers will be 40% to 60% short of demand through 2027. Meanwhile, the supply of 1.6 terabits per second (Tbps) optical transceivers will be 30% to 40% lower than demand through 2029.

Not surprisingly, Marvell is already experiencing healthy demand for these optical networking products. Importantly, it expects demand to continue ramping up as the year progresses. On the other hand, the custom AI processor market is also growing rapidly, driven primarily by hyperscalers' in-house chip development efforts, which are spending heavily on AI data centers.

Marvell, therefore, has a couple of solid long-term catalysts that should help boost growth in the long run. The good part is that Marvell's latest quarterly report clearly indicates that it is anticipating its growth to accelerate. But will it be enough for it to reach a trillion-dollar market cap in the long run?

Here's how Marvell could get to a trillion-dollar market cap

Marvell stock needs to jump by around 4.4x to become a trillion-dollar company. A closer look at its financial performance and guidance suggests that it indeed has the potential to do that.

Marvell is anticipating a 70% jump in its DCI business this year, up from the prior estimate of 50%. Meanwhile, it expects $600 million in revenue from switching products in fiscal 2027, followed by $1 billion in fiscal 2028. The revenue growth rate of the custom silicon business is expected to jump from 20% in fiscal 2027 to more than 100% in fiscal 2028.

As a result, Marvell has hiked its guidance and expects stronger growth in the coming years. This has prompted analysts to significantly raise their earnings growth expectations for Marvell.

Data by YCharts

Marvell reported earnings per share of $2.84 in fiscal 2026 (which ended Jan. 31, 2026). The chart above indicates that Marvell's earnings could grow at a compound annual rate of 47%. Assuming Marvell's earnings increase at a slower pace of 30% in the five years after fiscal 2029, its bottom line could reach $33.38 per share in fiscal 2034 (which will end in January 2034).

If this AI stock trades at 35 times earnings at that time (a discount to the tech-focused Nasdaq Composite index's multiple of 40), its stock price could jump to $1,168. That's just over 4.4x Marvell's current stock price, suggesting that it could indeed be worth a trillion dollars in the future.

However, it may not take eight years for this semiconductor stock to reach that milestone. Marvell's ability to clock faster earnings growth than the broader market means that it is likely to trade at a premium valuation going forward. So, investors would do well to buy Marvell as it can continue to soar following phenomenal gains so far this year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.