Why Marvell Stock Soared 67% in April
Key Points
The Nvidia partnership will enable Marvell to integrate its custom AI chips with Nvidia's AI networking and other AI-enabling technologies.
Marvell is reportedly in talks with Alphabet's Google to collaborate on two new custom AI chips.
Marvell announced it acquired Polariton Technologies, which will strengthen its optical technology portfolio.
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Shares of Marvell Technology (NASDAQ: MRVL), which makes data infrastructure semiconductors, soared 66.7% in April, according to data from S&P Global Market Intelligence. This is simply an amazing performance for a large-cap stock (market cap over $10 billion).
(In the first three trading days of May through May 5, Marvell stock is up 2.2%.)
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For context, in April, the S&P 500 index returned 10.5%, and the tech-heavy Nasdaq Composite index returned 15.3%. Artificial intelligence (AI)-related stocks -- a group that includes Marvell -- had a particularly good month overall. So, Marvell stock got a robust tailwind from the market's strength and the bullish sentiment surrounding the AI space. However, the company also had company-specific good news.
Image source: Getty Images.
Nvidia partnership and investment
Marvell stock got a big boost to start April when it and AI chip leader Nvidia (NASDAQ: NVDA) announced a strategic partnership that includes a $2 billion investment by Nvidia.
The news was announced on March 31, but Marvell shares continued their rise into April, with shares gaining 7.7% on April 1.
This partnership will enable Marvell to integrate its custom AI chips (application-specific integrated circuits, or ASICs, that the company calls "XPUs") with Nvidia's AI networking and other AI-enabling technologies. In other words, customers don't have to use Nvidia's graphics processing units (GPUs) as their AI chips.
The companies will also collaborate on silicon photonics technology, they said.
A potential collaboration with Alphabet on developing two new custom AI chips
The Information first reported on April 19 that Marvell is in talks with Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google to collaborate on two new custom AI chips.
Marvell stock jumped 5.8% on April 20, and gained 12.6% in the three market days following the announcement.
Acquisition announcement
On April 22, Marvell announced it acquired Polariton Technologies, a developer of high-speed, low-power plasmonics-based silicon photonics devices. The company said it will strengthen its optical technology portfolio. Financial terms were not disclosed.
The market liked the news, with Marvell stock rising 5.2% on April 23.
Upcoming quarterly report: May 27
Marvell Technology is scheduled to release its fiscal first-quarter report on Wednesday, May 27, after the market close.
Wall Street is expecting revenue to climb 27% year over year to $2.4 billion, and adjusted earnings per share (EPS) to jump 28% to $0.80.
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Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Broadcom, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.
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