Marvell Technology, Inc. (NASDAQ: MRVL) is strategically positioned to capitalize on the surge in artificial intelligence (AI) growth, bolstered by strong demand signals and expanding visibility into future revenue streams. This outlook follows insights gathered during a recent in-depth discussion hosted with Marvell’s Chairman and CEO Matt Murphy alongside Senior Vice President of Investor Relations Ashish Saran.
During this session, highlighted by JPMorgan analyst Harlan Sur, the company’s AI demand was described as exceptionally vigorous, with Murphy characterizing current bookings as 'on fire.' This optimism in the AI segment comes despite broader investor concerns about a potential moderation in AI-related spending.
Sur notes that Marvell continues to observe a growing backlog alongside increasingly clear revenue visibility horizons. Fourth-quarter bookings maintained momentum through the holiday season, underscoring the company's role in supporting a multi-year expansion of data center infrastructure.
The management has projected that the data center business should achieve approximately 25% growth in calendar year 2026, further accelerating to 40% in 2027. This acceleration is expected as new programs come online, enhancing the company’s position in this key market segment.
A significant component of Marvell's growth lies in the company's custom AI ASIC (application-specific integrated circuit) products. These specialized chips are expanding across customer bases, with expectations of a marked step-up in revenue. According to Sur, AI custom revenues are anticipated to reach around $1.8 billion in 2026, representing a 20% year-over-year increase, then doubling to an estimated $3.6 billion in 2027.
This revenue growth is largely driven by a strong scaling of the lead XPU customer’s programs, notably Amazon’s Trainium 3, which is on track to reach a $2 billion run rate in the second half of the year. Additionally, Marvell is advancing the production of 15 XPU-attach sockets and moving forward with multiple customer programs, including developments with a third Tier-1 XPU customer, Microsoft, which is progressing toward production readiness.
Sur elaborates that as the migration of AI training and inference workloads continues, an increasing share will be handled by flexible, programmable ASIC architectures, positioning Marvell favorably in this shifting landscape.
Complementing the AI segment, Marvell displays significant momentum in networking, particularly in optical networking where revenues are growing at a rate exceeding overall data center capital expenditure growth. The company is on track to generate approximately $500 million in switching silicon revenue in the current year, buoyed by new product ramp-ups including its 51.2T switch.
Furthermore, advanced Ethernet cabling and retimers are scaling rapidly, with revenues doubling year-over-year to reach several hundred million dollars, reflecting an accelerating industry adoption of PAM (pulse-amplitude modulation)-based technologies. Marvell’s mix of internal development and strategic acquisitions positions it strongly in scale-up networking markets.
Marvell has broadened its portfolio through disciplined mergers and acquisitions as well as meticulous supply-chain management. The acquisition of XConn Technologies enhances scale-up switching capabilities and complements the company’s PCIe and CXL technology offerings. Meanwhile, the acquisition of Celestial AI represents a significant deepening of Marvell’s engagement in photonic fabric technology, opening doors for future innovation.
On the supply side, Marvell has forged long-term partnerships and aligned demand forecasts closely with its suppliers. These efforts aim to secure supply stability, providing a foundation to support sustained AI-driven growth over the coming years.
Despite these optimistic operational indicators, the market reaction has been less favorable, with Marvell’s shares falling 4.44% to $84.31 during Wednesday trading as measured by Benzinga Pro data. This share price movement contrasts with the company's robust growth outlook and investor enthusiasm around AI expansion.
Key Points
- Marvell’s AI bookings are exceptionally strong, described as 'on fire' by CEO Matt Murphy, contributing to expanding backlog and improved revenue visibility.
- Data center business growth is expected to reach approximately 25% in 2026 and accelerate to 40% in 2027, driven by new program ramp-ups.
- Custom AI ASIC revenues are projected to increase to $1.8 billion in 2026 and double to $3.6 billion in 2027, largely propelled by Amazon’s Trainium 3 XPU and emerging programs with Microsoft.
- The networking segment, including optical networking and advanced Ethernet cabling, is experiencing rapid revenue growth, supported by new products and strategic acquisitions.
Risks and Uncertainties
- Investor concerns about a potential slowdown in AI spending could impact future demand trajectories and market valuation.
- Execution risks associated with scaling new AI and networking product programs remain, particularly in timely ramp-up and customer adoption.
- Integration and performance of recent acquisitions including XConn Technologies and Celestial AI will influence long-term strategic success.
- Supply-chain dependencies and the assumptions underlying long-term partnerships and demand forecasts may face disruptions impacting production capabilities.