CFRA Reaffirms Strong Buy Rating for Marvell Technology Despite Q4 Earnings Dip

Analysts Highlight Robust Performance and AI Growth Potential

Marvell Technology Inc (NASDAQ:MRVL) recently unveiled its fourth quarter fiscal year 2025 earnings, showcasing impressive financial growth that prompted CFRA analysts to uphold their Strong Buy recommendation for the chipmaker’s stock. Even though the company’s shares took a significant hit in aftermarket trading, tumbling between 15% and 17%, CFRA remains optimistic about Marvell’s long term prospects, particularly in the booming artificial intelligence (AI) and data center markets. The analysts pointed to the company’s ability to surpass Wall Street’s consensus forecasts as a key reason for their bullish stance, despite some investor disappointment over first quarter revenue projections that aligned with, rather than exceeded, expectations. This detailed analysis dives into Marvell Technology’s latest earnings, the stock’s sharp decline, and why CFRA continues to see it as a top investment pick for those seeking exposure to AI driven semiconductor stocks.

Marvell reported a record breaking revenue of $1.817 billion for the quarter, reflecting a robust 27% increase compared to the same period last year and a 20% jump from the prior quarter. This growth was largely fueled by soaring demand in its data center business, which generated $1.37 billion, up an astonishing 78% year over year and 24% sequentially. The surge underscores Marvell’s pivotal role in supplying custom chips and networking solutions critical to AI infrastructure, a sector experiencing unprecedented interest as tech giants and governments alike invest heavily in advanced computing capabilities. The company also achieved profitability under GAAP standards, posting a diluted income per share of $0.23, while its non GAAP earnings hit $0.60 per share, slightly beating analyst predictions of $0.59. With a non GAAP gross margin of 60.1% and operating cash flow reaching $514 million, Marvell returned $252 million to shareholders through dividends ($52 million) and stock repurchasing ($200 million), reinforcing its financial health and commitment to investor value.

Despite these strong figures, the stock’s steep drop after the earnings release puzzled some market watchers. Analysts attribute the sell off to Marvell’s first quarter fiscal 2026 guidance, which projected revenue of $1.875 billion, plus or minus 5%, and adjusted earnings per share between 56 and 66 cents. While these numbers met Wall Street’s baseline estimates, they fell short of the lofty expectations set by investors banking on explosive AI fueled growth. Adding to the downward pressure, short interest in Marvell’s stock had risen in the week leading up to the earnings, as noted by S3 Partners, amplifying the post earnings decline. Earlier in 2025, the stock had climbed 11% year to date and touched an all time high in January, making the sudden plunge even more striking. CFRA, however, views this reaction as an overcorrection, arguing that Marvell’s fundamentals and strategic positioning in the AI chip market remain exceptionally strong, making it a compelling buy for long term investors searching for undervalued semiconductor stocks with growth potential.

CFRA’s unwavering Strong Buy rating hinges on several key factors that highlight Marvell Technology’s resilience and future upside. The firm emphasized the company’s outperformance in the data center segment, which exceeded revenue expectations thanks to its focus on custom AI silicon, electro optics, and high performance Teralynx switches. Marvell’s AI related revenue already surpassed its $1.5 billion goal for fiscal 2025 and is on track to exceed $2.5 billion in fiscal 2026, signaling robust momentum. A landmark deal with Amazon.com, inked in late 2024, further bolsters this outlook, with Marvell set to supply Amazon Web Services (AWS) with custom AI chips for at least five years. This partnership positions Marvell as a critical player in the hyperscaler ecosystem, where companies like Amazon are racing to build proprietary AI solutions. Additionally, the U.S. government’s $500 billion initiative to expand domestic data center infrastructure aligns perfectly with Marvell’s offerings, providing a tailwind that CFRA believes will drive sustained growth in AI networking and custom chip demand.

Beyond these strengths, Marvell’s financial metrics paint a picture of stability and scalability. The company’s non GAAP operating margin improved to 33.7% in the fourth quarter, up from 28.9% for the full year, reflecting operational efficiency gains. Its net debt to EBITDA ratio stands at a manageable 1.58x, and an upgraded credit rating enhances its ability to fund future innovation. Looking ahead, Marvell has set an ambitious target of $15 billion in annual data center revenue by calendar year 2028, aiming for a 20% market share in this high growth sector. CFRA sees the company tracking well toward this goal, supported by engagements with multiple hyperscalers and a growing portfolio of AI optimized products. The firm also noted that broader market concerns, such as U.S. China trade tensions and questions about AI monetization amid a potential shift to low cost, high efficiency models, are temporary hurdles that do not detract from Marvell’s long term value proposition.

For investors, the upcoming Investor Day on June 10, 2025, in New York offers a critical opportunity to gain deeper insight into Marvell’s strategic roadmap and growth initiatives. This event could serve as a catalyst to shift market sentiment, especially if the company unveils new partnerships or technological advancements in its AI and data center offerings. In the meantime, CFRA’s Strong Buy rating stands out as a vote of confidence in Marvell Technology’s ability to navigate short term volatility and capitalize on the secular trends driving the semiconductor industry. The stock’s current dip may present a buying opportunity for those looking to invest in top AI chip stocks, particularly as Marvell continues to solidify its role in powering the next generation of data centers and artificial intelligence applications. With a proven track record of exceeding expectations and a clear path to future growth, Marvell remains a standout choice for savvy investors eyeing the intersection of technology and innovation.