TLDR:
- Marvell Technology’s stock dropped 8% as the company’s earnings outlook fell short of expectations.
- The company highlighted weaknesses in the consumer/carrier infrastructure and enterprise networking sectors but expects a recovery in the second half of the fiscal year.
In the latest earnings report, Marvell Technology Inc. saw its stock drop by about 8% as the company’s outlook failed to meet analysts’ expectations. While the company has been riding the wave of artificial intelligence investments, other areas of the business are facing pressure.
For the fiscal first quarter, Marvell projected revenue of $1.15 billion at the midpoint, falling short of the $1.38 billion expected by analysts. Additionally, adjusted earnings per share were forecasted to be between 18 cents to 28 cents, missing the FactSet consensus of 41 cents.
Marvell’s CEO, Matt Murphy, acknowledged the soft demand in consumer/carrier infrastructure and enterprise networking but expressed optimism for a recovery in the second half of the fiscal year. Despite these challenges, the company expects low-single-digit sequential growth in the data-center business with AI and standard cloud data centers driving growth.
In its fiscal fourth quarter, Marvell reported nearly flat overall revenue, but highlighted significant growth in its data-center business, fueled by the AI spending surge. The company announced a $3 billion increase to its stock-buyback program, reflecting confidence in its future prospects.
Overall, while Marvell’s stock took a hit in the short term due to weaker-than-expected outlook, the company remains optimistic about its long-term growth potential in the AI and data center markets.