With Marvell Shares Under Pressure, Here's Our Take and Plan
Here's what's weighing on the stock, price levels to watch, what's happening in the AI chip business, and why another boost for Big Tech capital spending levels is likely coming.
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Over the last few days, some of the rapid gains that followed Marvell’s (MRVL) late-September boost in its buyback program have faded amid renewed worries about a potential AI bubble. We’ve also seen moves lower in shares of other AI chip companies, including Nvidia (NVDA) , Broadcom (AVGO) , and ARM Holdings ARM.
Part of what is weighing on Marvell shares is the downgrade Barclays slapped on them to Equal Weight from Overweight but, in our view, that action was more than offset by recent price target increases from Roth Capital, UBS, and Oppenheimer. Roth and UBS both lifted their targets to $105, while the Oppenheimer increase to $115 came after it hosted investor meetings with Marvell CFO Willem Meintjes. Per Oppenheimer, those investor meetings were upbeat and focused on the custom AI ASIC project pipeline and opportunities well as the rebounding networking market.
During the Marvell’s most recent earnings call in late August, it telegraphed a ramp in the custom AI chip business this quarter, which should drive stronger second-half 2025 growth compared to the first half of the year. That program strength and others like it in the coming quarters, along with the rebound in networking and digital infrastructure demand, led the company to upsize and accelerate its buyback program just about a month ago.
We continue to see a rising AI tide lifting multiple boats, especially as data-center capacity remains constrained. Earlier this month, we learned that Microsoft’s (MSFT) data-center capacity issues will persist longer than previously indicated. In July, the company signaled capacity constraints would last through the end of this year, but now that timeline has been extended through the first half of 2026.
Given the AI adoption data points and signals we have seen, odds are Microsoft isn’t the only one experiencing this, which means we could see another leg up in capital spending next week from Microsoft, Amazon (AMZN) , Meta (META) , and Alphabet (GOOGL) . Remember, we learned from CoreWeave (CRWV) that it would be bringing quite a bit of capacity on stream during the current quarter.
Those demands and others led Taiwan Semi’s (TSM) High Performance Computing (HPC) segment to post a 57% year-over-year revenue gain in the September quarter. Moreover, the company's implied guidance points to that segment delivering a ~30% year-over-year gain in the current quarter. Before one jumps the gun, though, keep this in mind: Much like with Costco (COST) starting to anniversary tough year-ago comparisons, the same is true for TSM’s HPC segment, which grew 65% year over year in the September 2024 quarter and just under 70% in the December 2024 one.
To that, we can layer in the comments we shared Wednesday morning from Texas Instruments (TXN) about data-center demand as well as announcements tied to Oracle (ORCL) , Project Stargate, and other Big Tech companies. Those reinforce the likelihood we see data-center capital spending figures move up yet again next week.
At the same time, with quarterly results on deck Wednesday evening from SAP SE (SAP) , we’ll be focusing on what it says about customer AI adoption and usage. If we hear something similar to the signals we recently shared regarding BNY Mellon (BNY), Equifax ( (EFX) ), Axon (AXON) , and more recently ReturnPro, it would suggest AI adoption is accelerating. That would explain the ongoing capacity crunch mentioned above. Next week’s swath of earnings from Big Tech, as well as ServiceNow (NOW) and others, should also bring additional color on that rate of adoption and usage.
As it relates specifically to Marvell shares, we have to recognize we are back in an environment in which the market will trade day to day based on its latest developments, be they on the government shutdown, trade, or earnings front. We should also consider the beta attached to MRVL shares, which is 1.94, which means we should expect wider swings in the stock than others.
That said, we do see strong support for MRVL between $77-$78 given the converging 50-day and 200-day moving averages for the stock. Following close behind is the 100-day moving average near $75.
Considering the comments laid out above, we are inclined to remain owners of Marvell shares. And let’s not forget that capacity crunch — and the added capacity to address it — should be fuel not only for Marvell’s enterprise networking and carrier infrastructure business, but also for Arista Networks (ANET) .
At the time of publication, TheStreet Pro Portfolio was long MRVL, NVDA, MSFT, META, GOOGL, COST, NOW, AXON and ANET.
