Marvell Technology shares cratered 15% Friday after the AI chipmaker's critical data center segment missed Wall Street expectations and delivered underwhelming guidance for the current quarter. Despite record Q2 revenue driven by AI demand, investors are questioning the company's ability to maintain momentum as hyperscaler buildouts show signs of lumpiness.
Marvell Technology just delivered a harsh reality check to investors betting on the AI chip boom. The semiconductor company's shares plummeted 15% Friday morning after earnings revealed that even record-breaking revenue can't satisfy Wall Street's insatiable appetite for AI growth stories.
The numbers tell a complex story. Marvell posted $2.01 billion in Q2 revenue, exactly meeting analyst estimates and representing a stunning 58% jump from last year. The company flipped from a $193.3 million loss to a $194.8 million profit, beating earnings expectations at 67 cents per share versus the 66 cents consensus.
But here's where the celebration stopped: data center revenue hit $1.49 billion, falling $20 million short of Wall Street's $1.51 billion projection according to StreetAccount data. For a company positioning itself as a critical AI infrastructure play, any miss in the data center segment sends shockwaves through investor confidence.
[embedded image: Marvell Technology headquarters in Santa Clara]
CEO Matt Murphy tried to reassure investors during Thursday's earnings call, attributing the guidance to "nonlinear growth" in custom AI chips business. "Overall data center revenue in Q3 to be flat sequentially," Murphy explained, though he promised "substantially stronger" fourth-quarter growth. The executive framed this "lumpiness" as normal behavior from large hyperscalers building infrastructure.
That explanation didn't satisfy analysts. Bank of America moved swiftly Friday morning, downgrading Marvell from buy to neutral and slashing their price target from $90 to $78. The downgrade specifically cited concerns around the company's "AI growth prospects in the near/medium term."
Cantor analysts were even more pointed in their criticism. "Without this, we find it very difficult underwriting the company's 20% data center market share target," they wrote in a Thursday client note. "Thus, we wait for more bottoms up granularity before potentially turning more positive."
The broader context makes Marvell's stumble particularly significant. While dominates GPU headlines, plays a different but crucial role in AI infrastructure, creating customized chips and hardware for cloud giants like and . The company's custom silicon and electro-optics products have become essential components as hyperscalers build out their AI capabilities.
