Topline
Shares of Marvell Technology surged to a record high on Wednesday, as the semiconductor firm eclipsed a market capitalization of $100 billion for the first time after reporting better-than-expected earnings and an expanded deal with Amazon to collaborate on cloud software and hardware.
The semiconductor firm announced a five-year deal with Amazon to collaborate on cloud software and … [+]
Key Facts
Marvell’s shares jumped nearly 23% to just under $118 as of around 3:35 p.m. Wednesday, increasing the company’s market capitalization to over $103 billion from $83 billion after shares reached as high as $119.88.
On Tuesday, Marvell reported third-quarter revenue of $1.52 billion and adjusted earnings per share of $0.43, ahead of analyst projections of $1.45 billion and $0.41, according to FactSet.
Marvell raised its guidance for its fourth quarter, indicating an increase in revenue and surge in AI demand would result in revenue between $1.71 billion and $1.89 billion and adjusted earnings per share of up to $0.65, an estimate well above projections of $0.52.
Marvell’s existing partnership with Amazon Web Services was expanded on Monday with a five-year “multi-generational” agreement for Marvell to supply Amazon with data center semiconductors, including custom AI products, to reduce costs for AWS.
Cody Acree, an analyst for Benchmark Research, wrote Wednesday the venture capital firm believes Marvell is a “unique, non-Nvidia alternative” in the AI and data center market, while UBS wrote in a note saying Marvell’s AI revenue could hit $3.6 billion in 2025, ahead of the company’s target of $2.5 billion.
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Big Number
103%. That’s how much Marvell’s shares have increased so far this year.
Tangent
Rival Nvidia’s shares rose by 3.7% on Wednesday, despite analysts suggesting Marvell poses a threat in the AI market. Bank of America analyst Justin Post said in a note Amazon spent more than $20 billion on Nvidia’s chips, compared to between $1 billion and $2 billion on Marvell’s. Nvidia is working in partnership with AWS on Project Ceiba, a supercomputer for AI programs that includes more than 20,000 of Nvidia’s Blackwell graphics processing units.
Key Background
Marvell’s stock has risen this year in parallel with a growing demand for advanced chips for generative AI. Amazon, which designs its in-house chips in partnership with Marvell, has relied on both Nvidia, Marvell and other companies to develop its AI products. Marvell has reportedly been approached by companies like Amazon, Google and Microsoft to provide custom AI chips as an alternative to Nvidia, whose products have dominated the market. Reuters reported Marvell’s chief executive Matt Murphy was contacted by Intel to potentially become the chipmaker’s next CEO, after CEO Pat Gelsinger’s resignation. Murphy—who was appointed as Marvell’s CEO in June—appeared to decline the offer, telling analysts on Tuesday he was “100% focused” on Marvell’s growth.
