Turnaround and Earnings Beat Turn Into Sell-Off—Why Isn’t the Market Buying In on Marvell?

TradingKey - Chipmaker Marvell Technology (MRVL.US) released its Q1 2026 fiscal earnings report recently, delivering key financial metrics that met or slightly exceeded market expectations. However, the stock fell more than 3% in after-hours trading, signaling investor caution over the sustainability of its growth momentum.

[Marvell Technologies After-Hours Intraday Chart, Source: Futu]

After U.S. markets closed on Thursday, Marvell announced its latest quarterly results:

- Revenue for the first quarter of fiscal 2026 reached USD 1.9 billion, slightly above the expected USD 1.88 billion, representing a year-over-year increase of 63%.

- Adjusted EPS came in at USD 0.62, just ahead of the estimated USD 0.61, and showed a significant improvement compared to the same period last year.

The company also forecasted Q2 revenue of USD 2.0 billion, in line with analyst projections.

Marvell’s Chairman and CEO Matt Murphy stated: “We delivered record revenue of USD 1.895 billion in Q1, up 63% year-over-year. We expect strong growth momentum to continue into the second quarter.”

He also emphasized that as the industry continues to shift toward customized AI infrastructure, Marvell is positioned at the heart of this transformation. The company plans to host a “Customized AI Investor Day” on June 17, where it will provide deeper insights into its technical advancements and market opportunities.

In recent years, Marvell has been deeply involved in the global transition from general-purpose chips to customized AI hardware. While tech giants like Apple, Google, and AWS have ramped up in-house chip development, Marvell has focused on designing data center chips for AWS and other cloud service providers, securing substantial order inflows as a result.

Data shows that Marvell’s Data Center segment saw revenue jump 88% year-over-year in fiscal 2025, now accounting for 72% of total company revenue—making it the primary engine driving overall growth.

However, the combined revenue growth from Marvell’s other five business segments totaled only 32%, far below the pace set by the data center division. This highlights growing concerns around business imbalance and overreliance on a single vertical.

Despite seemingly solid financials, investor sentiment remains lukewarm. Key reasons include:

- Concerns about the longevity of Marvell’s growth, especially as the AI-driven tailwind shows signs of slowing at the margin. With multiple valuation re-rating cycles already priced in, there appears to be limited room for new upside catalysts.

- Intensifying competition from rivals such as NVIDIA, Broadcom, and Intel, all of whom are aggressively expanding their AI chip offerings. Marvell’s technological moat has yet to be fully established.

While Marvell delivered a technically “clean” earnings report, the market is clearly no longer willing to take growth narratives at face value—especially amid a backdrop of moderating AI demand, concentrated customer exposure, and rising competitive pressure. This so-called “paper victory” masks a deeper test of long-term sustainability.