Sticking With This Marvell Price Target as We Look to Lock in Big Gains

Following the growing number of positive AI and data center data points, we remained not only patient investors in the shares of Marvell MRVL but when the shares came under pressure in recent months, we added to the Portfolio’s position.

At the company’s Custom Silicon Investor Day held late on Tuesday, our follow-the-data approach was rewarded, and we are seeing Wall Street firms, including Bank of America, lift their price targets while Morgan Stanley reiterates its $133 target for MRVL shares.

Exiting the event, which adds meaningful color to the expected ramp in Marvell’s business over the next few years, we reiterate our $115 price target.

As we do that, however, it’s not lost on us that the shares have moved past a 4.5% position size for the Portfolio. While we like to let our winners run, our plan is to let the shares fully absorb the positive post-event comments and look to lock in some of the big gains since early April in the very near term.

Marvell’s Custom Silicon Investor Event

Marvell management addressed market speculation about its role in the custom AI silicon market head-on on Tuesday, sharing that in addition to the three AI socket wins it’s mentioned previously, in total it has 18 different sockets in the custom market across Big Tech players and emerging hyperscalers. Moreover, the company is tracking more than 50 additional opportunities in its pipeline, some of which are future versions of existing socket wins.

During the presentation, Marvell specified that 12 of the 18 custom sockets are with four of the top U.S. hyperscalers, which can be inferred to mean Microsoft MSFT, Amazon AMZN, Meta META and Alphabet GOOGL. The balance is with emerging hyperscalers. This should push back on market share questions, and in our view should remind investors the AI and data center build out should be viewed as a rising tide that will lift multiple boats, and Marvell is one of them.

Speaking further on those 18 wins, Marvell shared that some of them are in production today and others that come on stream in 2026 and 2027. That led Marvell to increase its total available market (TAM) to $94 billion by 2028, up 25% higher than the $75 billion by 2028 it outlined this time last year. The ramp of those programs could limit margin improvement near-term but even so the company should continue to generate larger profit dollars as those volumes ramp, painting a favorable outlook for EPS growth in the coming years.

As those programs mature, just like we expect with Nvidia NVDA and Blackwell production, we should see margins at Marvell improve. That combination of higher volumes and larger profit dollars keeps us long-term bullish on MRVL shares, and as we have confirmation of those programs ramping as well as overall AI and data center chip demand remaining strong, we’ll revisit out price target as needed.

A quick word on the 50 opportunities Marvell is tracking in its pipeline: That is an encouraging figure, but because we’ve been around the block a few times, we understand quite well the risk in reading too much into potential design wins. Looking back in the mobile phone and smartphone markets, not all designs wins become shipping product and that caused quite a bit of heart ache for investors in companies like Three-Five Systems that primarily served Motorola. Many of you probably haven’t heard of Three-Five, which was a darling stock back in 2000 and today the company is no longer around.

Now, things are quite different between Marvell and the LCD display company that was Three-Five. For starters, we have a multi-year tailwind for Marvell, and it is diversifying its custom silicon customer base. This means we will continue to focus on announced socket wins over pipeline tracking potential. And yes, we recognize that a company can’t get a hit unless it has an at bat opportunity, but we also want to avoid one cardinal sin when it comes to investing: falling in love with your companies.

Finally, while the event focused on the AI custom silicon business, we will remind you that Marvell remains well positioned to address network and carrier infrastructure capacity bottle necks as AI usage and consumption grows. Looking ahead, this means we should see the vast majority of Marvell’s end markets firing on all cylinders in the coming quarters. Another reason for us to remain not only bullish but owners of MRVL shares.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long MRVL, MSFT, AMZN, META, GOOGL and NVDA.