Freedom: Marvell’s new guidance strengthens the company’s long-term business potential

Marvell Technology’s (MRVL) new guidance materially raises estimates of the company’s long-term potential, Freedom Broker analysts believe. The semiconductor maker expects to generate about $20 billion in revenue in fiscal 2028, with $18 billion expected to come from data-center solutions. Experts link the business outlook to demand for specialized AI accelerators and high-speed interconnects. 

Data centers become the backbone of growth

Marvell is a U.S. developer of semiconductor solutions for data centers, networking infrastructure, and data storage systems. The company designs custom chips to meet the requirements of large customers and components for transferring data between computing systems.

According to Freedom Broker, the forecasts presented at the investor day strengthen Marvell’s long-term prospects. The main sources of demand remain custom artificial intelligence accelerators and solutions that enable fast data exchange.

For AI infrastructure, it is not only the performance of individual processors that matters, but also the speed of interaction between them. The development of large-scale computing systems increases the need for networking components and interconnects—one of Marvell’s key areas.

2028 target raised to $20 billion

At the investor day in early October, Marvell presented a fiscal 2028 revenue forecast of about $20 billion. This is roughly 11% higher than the $18 billion target the company announced in August.

Expected revenue from data centers is $18 billion—about 90% of the total. Thus, further business growth will largely depend on customer investment in computing infrastructure.

For fiscal 2031, Marvell outlined a more ambitious goal: $70–90 billion in revenue and earnings per share above $30. These are management’s future targets, not published financial results.

The latest quarter confirmed demand for AI solutions

In the second quarter of fiscal 2027, Marvell’s revenue reached a record $2.74 billion, up 37% year over year. Net income rose by about 58%, from $194.8 million to $308 million. Adjusted earnings per share increased from $0.67 to $0.94.

The data-center solutions business remained the main source of growth. Its revenue increased 46% to $2.17 billion, and its share of total sales reached 79% versus 74% a year earlier. At that time, the company raised its fiscal 2027 revenue forecast to about $12 billion, and fiscal 2028 to $18 billion. The October presentation became the next upgrade to growth expectations.

Agreement with Google expands Marvell’s capabilities

An important element of the long-term strategy remains cooperation with Alphabet (GOOGL), Google’s parent company. The agreement through 2033 covers components of the ecosystem for specialized TPU processors: accelerators for running AI models, controllers for data storage, network interfaces, and memory.

At the same time, Marvell is not directly involved in TPU development. As Freedom Broker analysts previously noted, access to this ecosystem could intensify competitive pressure on Broadcom (AVGO), which develops TPU, and limit its pricing power.

The terms of the partnership provide Google with rights to purchase Marvell shares as specified revenue volumes are reached. Full satisfaction of the relevant conditions is tied to cumulative orders of $120 billion through the end of fiscal 2033.

Previously, investors were concerned about the timing of revenue

In late August, strong earnings and higher forecasts did not prevent Marvell shares from falling. Previously, Freedom analysts attributed such a reaction to high investor expectations and the timing of income from the partnership with Google. The company has already included part of the expected revenue in its forecasts through fiscal 2028; however, management expects a more meaningful contribution from new projects starting in 2029.

October’s guidance strengthens the long-term view of the business, but the timing of project execution remains important. To compare results with plans, key indicators will be data-center revenue growth, the start of shipments of new solutions, and their contribution to the company’s profit.

Not an individual investment recommendation.