Wall Street May Be Underestimating This Smaller AI Chip Stock
Marvell's custom silicon business is ramping across the top hyperscalers just as Wall Street consensus starts to look like it missed something important. Here is what the numbers reveal about where this smaller chip stock could be headed.
The 24/7 Wall St. price target for Marvell Technology (NASDAQ:MRVL | MRVL Price Prediction) is $284.80 over the next 12 months. With shares at $248.71, that means 14.5% upside. The stock wins a buy rating from our model at 90% confidence, placing it in our high-conviction level.
24/7 Wall St. Price Target Summary
| Metric | Value |
|---|---|
| Current Price | $248.71 |
| Price Target from 24/7 Wall St. | $284.80 |
| Upside/Downside | 14.5% |
| Recommendation | BUY |
| Confidence Level | 90% |
Marvell is a fraction of the size of Broadcom (NASDAQ:AVGO), but its data center business keeps growing fast enough that management has had to raise its targets again. Its custom silicon ramp is only starting to show up in reported revenue.
A 193% Rally and a Pullback That Reset the Valuation
Marvell shares are up 193.16% year to date and 3.45% over the past week, but they are 5.03% lower over the past month. The stock trades about 24.6% below its 52-week high of $329.73 and well above its $70.62 low.
In August, Marvell reported record revenue of $2.739 billion. That was up 37% from a year earlier and above the $2.7068 billion consensus. Non-GAAP EPS of $0.94 beat the $0.9289 estimate, the fourth straight quarterly beat. Data center revenue rose 46% to $2.17 billion and now makes up 79% of sales.
For fiscal Q3, management forecast revenue to $3.150 billion, plus or minus 5%. Marvell also expanded its custom silicon partnership with Alphabet (NASDAQ:GOOGL) unit Google.
The deal includes a warrant that lets Google acquire up to 7% of Marvell’s shares if revenue milestones are met. Marvell’s October Investor Day deck said its custom silicon now ships to the top four hyperscalers.
Why Bulls See $350 or More
The bull case is $352.54, about 41.7% above today’s price. Management expects fiscal 2028 revenue to grow about 50% and custom revenue to more than double. For fiscal 2029 custom revenue, Marvell’s CEO repeated a target of “$10 billion plus” and said “all of our projections to date have been under-called.”
Management also expects non-GAAP operating margin to its 38% to 40% target range in fiscal Q4. Analysts lean heavily positive, with 8 strong buy ratings, 32 buys, 6 holds and no sells. Their consensus target means 37.3% upside.
Risks That Could Cap the Upside
The bear case sits at $218.43, about 12.2% below current levels. Customer concentration is the biggest risk, because hyperscalers could bring chip design in-house. The growing share of custom chips is also pressuring margins.
Fiscal Q3 non-GAAP gross margin is forecast to 57.5% to 58.5%, down from 58.9%. Stock-based compensation rose to $207.6 million in fiscal Q1 from $142.1 million a year earlier. Shares can also swing hard: they fell from $278.67 in mid-June to $188.30 a month later.
Bulls would argue the margin dip comes from a custom ramp that adds far more revenue dollars. The balance sheet also looks solid, with net debt to EBITDA of 0.27x and $3.93 billion in cash.
Marvell Sits Between Broadcom and AMD on Valuation
Broadcom vies directly with Marvell for hyperscalers’ custom accelerator and networking business. The stock changes hands at 18x forward earnings even though revenue grew 85.5% last quarter, helped by $16.70 billion in AI semiconductor revenue.
On that measure, Marvell’s 31x multiple looks expensive. Marvell’s smaller revenue base does mean each new custom win moves its results more.
Advanced Micro Devices (NASDAQ:AMD) gives a scaled AI accelerator comparison. AMD trades at 34x forward earnings after its data center revenue grew 107% to $6.718 billion. That makes Marvell a bit cheaper by comparison.
| Company | Forward P/E | Quarterly Revenue Growth (YoY) |
|---|---|---|
| Marvell | 31x | 36.5% |
| Broadcom | 18x | 85.5% |
| AMD | 34x | 50.1% |
Marvell’s valuation falls between its two biggest AI peers. That makes the 24/7 Wall St. price target look reasonable.
Custom Silicon Visibility Tips the Scale
The 24/7 Wall St. price target of $284.80 comes with a buy rating and 90% confidence. The deciding factor is visibility. Management raised its outlook for both fiscal 2027 and fiscal 2028, and custom revenue is set to accelerate in the second half.
The case gets stronger if fiscal Q3 results land near the $3.150 billion guidance and gross margin holds inside the forecast range. It gets lighter if a major hyperscaler moves programs in-house. On balance, Marvell’s growth outweighs its volatility.
Our model projects where Marvell could trade if current trends hold.
| Year | Price Target from 24/7 Wall St. |
|---|---|
| 2026 | $260.34 |
| 2027 | $284.80 |
| 2028 | $313.09 |
| 2029 | $334.42 |
| 2030 | $376.39 |
The projections rest on Marvell continuing to carry out its custom silicon and optical strategy. Faster hyperscaler adoption of scale-up optics could drove results higher. Losing a major customer could drove them lower.
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Vandita Jadeja is a financial publisher with over a decade of experience writing about financial topics, including investment, savings, retirement, insurance and banking. Vandita is a Chartered Accountant who loves to debunk financial concepts for readers.
Her work has appeared on sites that include The Motley Fool, InvestorPlace, and Benzinga. She covers investing and focuses on stock picks and price prediction for 24/7 Wall St.
When not looking for the next stock investment opportunity, she can be found traveling, reading, chasing sunsets and enjoying her iced latte.
