Locking in an Unexpected Pop in This Chip Holding on 'Old News'
As we make this opportunistic trade, we continue to like its prospects amid rising AI and data-center spending and network bottlenecks.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
MRVL | Sell | 240 | 99 | 2,330 | 4.1 |
After you receive this Alert, we will sell 240 shares of Marvell Technology (MRVL) at or near $99. Following the trade, MRVL shares will account for roughly 4.1% of the Pro Portfolio’s assets.
Our shares of Marvell are popping Thursday morning following reports that SoftBank (SFTBY) explored a takeover of the company, intending to combine it with Arm Holdings (ARM) to bolster its position in AI and data-center infrastructure. That potential has been picked up by the media, and no doubt giving way to some thinking about such a combination.
The issue is this: That exploration was conducted earlier this year, probably when MRVL shares were trading in the $50s back in April and May. Reading the entirety of these reports, we find SoftBank “has been studying Marvell as a possible target on and off for years” and that while “they aren’t currently in active negotiations on a deal, it’s possible the interest could be revived.”
As we like to say, the details matter, and in this case, it seems we are likely seeing a overreaction similar to the one we saw recently when Qualcomm (QCOM) announced it was entering the data-center chip market in a targeted fashion next year. In that instance, QCOM shares popped, reaching as high as $205 before quickly fading back to below $180. Fortunately, we were able to lock in a slice of that unexpectedly strong overreaction by selling some QCOM at $190.55.
In making that QCOM move, we explained that it was only an opportunistic move and, because of the longer-term potential of the company’s diversification strategy, we maintained a sizable QCOM position.
Because the market will likely realize this SoftBank–Marvell news is actually old news, we are replicating that QCOM trim trade today with MRVL shares. We continue to see Marvell and our shares benefiting from the AI and data-center buildout and ensuing digital network capacity bottlenecks. The next set of upcoming and known catalysts for MRVL and Nvidia (NVDA) shares will be the October monthly revenue reports from Taiwan Semiconductor (TSM) and Foxconn (FXCOF).
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long MRVL, NVDA, and QCOM.
