Key Points
Marvell Technology has high revenue growth and optimistic guidance that suggests it has the potential to become a $1 trillion company.
New product upgrades highlight its efforts to gain ground on competitors and boost its market share.
There are other candidates that are likely to hit $1 trillion sooner than Marvell Technology.
- 10 stocks we like better than Marvell Technology ›
Marvell Technology (NASDAQ: MRVL) already had a good start to the year as more investors noticed its ASIC chips and optical interconnects. Then, Nvidia (NASDAQ: NVDA) CEO Jensen Huang put this AI stock on everyone's radar by declaring it would be the next trillion-dollar company.
The stock unsurprisingly took off on that news and has more than tripled year to date. Is the rally here to stay, or should investors lock in some of their gains now?
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Here's what people should consider as Marvell Technology continues its rally.
Image source: Getty Images.
Marvell Technology hinted at meaningful long-term growth
High growth rates are a prerequisite for outperforming the S&P 500 over the long run, and Marvell Technology has been delivering on that regard. It posted 28% year-over-year revenue growth in its fiscal 2027 first quarter, but that wasn't the most exciting part about the earnings report.
Guidance implies $2.7 billion in Q2 FY27 revenue, which represents 35% year-over-year growth and 11.7% sequential growth. Marvell Technology CEO Matt Murphy also told investors to expect accelerated revenue growth each quarter throughout fiscal 2027. This optimistic outlook isn't even exclusive to fiscal 2027.
"We are seeing exceptional AI-related bookings, and as a result, we are significantly raising Marvell's revenue outlook for both fiscal 2027 and fiscal 2028 compared with the guidance we provided last quarter," Murphy said.
That's the type of guidance that suggests a $1 trillion valuation is possible in the future, but other AI stocks may get there first. AI stocks like Advanced Micro Devices and Sandisk are closer to the milestone and are exhibiting higher revenue growth rates right now. Luckily, the optimistic guidance from Marvell Technology isn't the only bullish development.
The Teralynx T100 makes AI data centers more efficient
Marvell Technology issued a press release earlier this month that heralded the Teralynx T100 as a networking chip that delivers 25% lower power than competitive solutions and achieves the industry's lowest latency for AI training and inference workloads.
This is one of Marvell Technology's AI products that is designed to optimize data centers. This one ensures less energy is consumed for the same tasks, and with energy in such high demand, optimizing the use of existing energy is extremely desirable. Since this product line was just upgraded, the Teralynx T100 can be a major part of future earnings results.
This product goes along nicely with Marvell Technology's product portfolio of ASIC chips and optical fibers. More product innovations will help the company keep its competitive edge and gain more market share.
Should you buy stock in Marvell Technology right now?
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Marvell 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.
