Why Marvell Technology Fell Nearly 30% in the First Half of 2025

Key Points

• Marvell entered 2025 at a very high valuation.

• The release of China's DeepSeek and Trump's trade war weighed on shares.

• However, its shares didn't recover in the matter other rivals did, as investors came to doubt Marvell's competitive position somewhat.

• 10 stocks we like better than Marvell Technology ›

Shares of communications semiconductor specialist Marvell Technology (NASDAQ: MRVL) fell 29.9% in the first half of 2025, according to data from S&P Global Market Intelligence.

Marvell didn't necessarily report any bad news per se in the first half. Rather, the stock's decline may have been the result of a very high valuation entering the year. And although Marvell should ultimately be able to get its share of custom AI XPU chip share, worries over very strong competition in that area may have kept a lid on a May/June recovery, which most other AI chipmakers experienced.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Marvell can't escape the fear, uncertainty, and doubt in the first half

Marvell's starting point may have had more to do with its first-half decline as much as than anything else. In 2024, the stock rallied nearly 84%, with the company entering 2025 at a valuation of 70 times 2025 earnings estimates.

That lofty perch certainly had a lot of expectations built in, including future growth in custom XPU chips, which Marvell makes for cloud clients such as Amazon (NASDAQ: AMZN), as well as the associated communications chips needed to fill AI data centers. In addition, Marvell's chips that serve legacy businesses like enterprise communications, consumer electronics, and auto/industrial were thought to be on the brink of a recovery after two downcycle years.

Marvell actually delivered on those expectations, beating analyst expectations for revenue and adjusted profit in its two earnings reports; however, a valuation that high suggests multiple years ahead of high AI-powered growth. And on the front, some questions emerged.

Marvell's super-important custom AI chip business, in which it makes part of AI chips designed by cloud giants, is very levered to one big client: Amazon. On Marvell's March earnings call, sell-side analysts brought up the prospect that Marvell's main competitor, Broadcom (NASDAQ: AVGO), is vying for Amazon's custom silicon business.

CEO Matt Murphy said that he still expected growth in revenue from this "big customer" this year, next year, and beyond, but couldn't comment on rumors as to whether Amazon was also working with a rival.

Marvell's stock had a harsh post-earnings reaction, probably spurred on by that lack of clarity. In addition, the release of China's DeepSeek model spurred doubts about the needed size of the AI buildout. And the administration's tariff war also harmed the semiconductor sector, given the very international nature of modern electronics supply chains.

Marvell has rerated, so it's a more reasonable AI play

Marvell is still 43% off its 52-week highs, and now trades at a more reasonable 25 times this year's adjusted earnings estimates. Moreover, Marvell recently increased its estimates for the 2028 AI custom compute market size, relative to estimates given last year. Now, Marvell expects a $55 billion custom AI market, relative to the $43 billion estimate given at last year's Investor Day. And the custom AI market is part of an overall Data Center total addressable market, which includes interconnects, switching, and storage, which Marvell now expects to reach $94 billion in 2028, relative to last year's estimate of $75 billion.

In short, Marvell could be primed for a second-half comeback -- although another big custom XPU customer announcement outside of Amazon would go a long way toward making that happen.

Should you invest $1,000 in Marvell Technology right now?

Before you buy stock in Marvell Technology, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Marvell Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $679,653!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,046,308!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 179% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Billy Duberstein and/or his clients have positions in Amazon and Broadcom. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Broadcom and Marvell Technology. The Motley Fool has a disclosure policy.