Why Marvell Stock Rallied Today
Key Points
AI chip and infrastructure stocks got a lift from rumors of a potential chipmaking deal between Intel and SK Hynix.
The pair are reportedly in talks to make memory chips in the U.S. for the first time.
What benefits Intel and the broader AI industry could also benefit Marvell.
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Shares of Marvell Technology (NASDAQ: MRVL) charged sharply higher on Wednesday, jumping as much as 5.4%. As of 11:59 a.m. ET, the stock was still up 3.5%.
The catalyst that sent the semiconductor and infrastructure specialist higher was rumors of a potential deal between two peers in the artificial intelligence (AI) chip space.
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Let the chips fall where they may
A report that first appeared in Reuters suggested that SK Hynix (NASDAQ: SKHY) is in talks with Intel (NASDAQ: INTC) to manufacture its memory chips in the U.S. for the first time. As part of the proposed deal, SK Hynix could lease a portion for Intel's chipmaking facility in Ohio. SK Hynix is also exploring a potential joint venture with Intel and major cloud providers looking to lock in a supply of memory chips.
The memory specialist issued a statement that appeared to confirm the discussions but insisted that no agreement had been reached. "SK Hynix is exploring various options to strengthen its global competitiveness," the company wrote in a statement, "but no specific plans or arrangements have been finalized at this time."
If an agreement can be reached, it would be a boon to Intel, which has been looking for marquee deals for its Ohio foundry. The facility, which has faced multiple delays, is expected to be operational in 2030.
So, what does this have to do with Marvell?
Marvell and SK Hynix are already partners, working to accelerate data transfers between processors and memory chips. Moreover, it's no secret that the biggest bottleneck in AI is the shortage of memory chips, such as those supplied by SK Hynix and others. Any steps taken to ease the backlog are good for the advancement of AI, and a positive for the industry overall, which is why the deal is boosting Marvell today.
To be clear, Marvell stock is a bit pricey, selling for 34 times next year's expected earnings. However, the company's record revenue and accelerating growth suggest it might still be worth a look.
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Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Marvell Technology. The Motley Fool has a disclosure policy.
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