Key Points
Marvell’s big bet on data centers is paying off.
Its stock isn’t cheap, but it has plenty of growth potential.
- 10 stocks we like better than Marvell Technology ›
Micron's (NASDAQ: MU) stock surged more than 730% over the past 12 months. That rally was driven by its soaring DRAM and NAND memory chip sales for AI-oriented data centers. Micron was once considered a cyclical company that went through "boom and bust" cycles. That perception changed as the AI market expanded and it recently secured over $22 billion in uncancellable, multi-year, fixed-price contracts through 16 Strategic Customer Agreements (SCAs) with data center giants.
From fiscal 2025 (which ended last August) to fiscal 2028, analysts expect Micron's revenue to surge nearly sevenfold as its EPS increases more than 22 times. Those are incredible growth rates for a stock that trades at less than nine times this year's sales and 13 times this year's earnings, so it could still have plenty of upside potential.
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Micron is still a rock-solid investment, but it's not the only cyclical chipmaker that is evolving into a high-growth AI chipmaker. Another promising stock is Marvell (NASDAQ: MRVL), which has rallied more than 250% over the past 12 months and still has lots of room to run.
Why is Marvell becoming a high-growth AI chipmaker?
In the past, Marvell mainly produced Wi-Fi, Internet of Things (IoT), and mobile chips for consumer devices. But over the past decade, it stopped producing those cyclical, lower-margin chips and expanded its data center with big acquisitions and new product launches.
Today, Marvell generates most of its revenue from its data center business, which produces high-speed optical connectivity chips, custom application-specific integrated circuits (ASICs) for hyperscalers, Ethernet switches, and data processing units (DPUs) that combine CPUs, networking interfaces, and programmable data acceleration engines.
As the AI market expands, more companies are upgrading their data centers with Marvell's hardware to handle the latest AI applications. Nvidia (NASDAQ: NVDA) also invested $2 billion in Marvell earlier this year and more tightly integrated its own GPUs, CPUs, and DPUs with Marvell's custom AI accelerators and networking chips through its NVLink platform. It's also co-developing advanced optical interconnect and silicon photonics solutions with Nvidia to eliminate data-transfer bottlenecks in cloud and AI data centers.
How much higher can Marvell's stock soar?
From fiscal 2026 (which ended this January) to fiscal 2029, analysts expect Marvell's revenue and adjusted EBITDA to grow at CAGRs of 41% and 43%, respectively. It might seem a bit pricey at 19 times this year's sales and 50 times its adjusted EBITDA, but its long-term growth potential justifies those higher valuations. So if you're looking for an oft-overlooked AI chipmaker that could replicate Micron's massive rally, Marvell might fit the bill.
Should you buy stock in Marvell Technology right now?
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
