As Marvell Jumps on Nvidia Deal, Here's Where I'd Pull the Trigger
Stay at the ready today, as this semiconductor stock is on the rebound after Monday's dive.
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Marvell Technology (MRVL) on Monday sold off 7.5% to close at $87.81 as memory and storage chip stocks, equipment providers, foundries and graphics and central processing unit designers all took a hit. This was despite that Marvell along with Nvidia (NVDA) and Broadcom (AVGO) were named top picks in the space by Oppenheimer analyst Rick Schafer.
Schafer, who is not "merely" rated at five stars out of five by TipRanks, but is a truly elite sell-side analyst, opined publicly. Ranked at number 27 out of the 12,128 analysts ranked by TipRanks, Schafer wrote, “We visited an assortment of companies across the Asia semiconductor supply chain last week. The AI race continues full tilt, with unfettered (cloud service providers) demand outpacing supply well into 2027. AI-related supply tightness spans vectors, most notably advanced wafers, packaging, and memory. Lead times remain stretched. Prices (are) broadly rising and likely to be passed on to customers as insatiable AI absorbs supply.”
Tuesday Morning
I see MRVL trading around 7% higher this morning as I write. Due to Schafer's positive take? Nope. Early on Tuesday, Nvidia announced that it was making a $2 billion investment in Marvell Technology. The two will work together on advancing silicon photonics technology and networking for telecom purposes. This new strategic partnership will connect custom designed Marvell AI accelerators to the Nvidia AI factory and AI-RAN ecosystem through Nvidia's NVLink Fusion.
Nvidia will add Vera CPUs, ConnectX NICs, Bluefield DPUs and Spectrum-X switches as well as rack-sale compute to those Marvell accelerators to Nvidia's Aerial AI-RAN to bring world class networking and artificial intelligence to telecom industry to upgrade 5G and eventually 6G bandwidth offerings for both users and providers. This is the third made by Nvidia of this size just in March alone, coming after the deals announced with Lumentum (LITE) and Coherent (COHR) .
Related: Nvidia’s $2 Billion Investment in This Holding Should Be a Wall Street Wake Up Call
The CEOs
- Marvell CEO and Chair Matt Murphy commented, “Our expanded partnership with NVIDIA reflects the growing importance of high-speed connectivity, optical interconnect and accelerated infrastructure in scaling AI. By connecting Marvell’s leadership in high-performance analog, optical DSP, silicon photonics and custom silicon to NVIDIA’s expanding AI ecosystem through NVLink Fusion, we are enabling customers to build scalable, efficient AI infrastructure.”
- Nvidia CEO, Chair and founder Jensen Huang said, “The inference inflection has arrived. Token generation demand is surging, and the world is racing to build AI factories. Together with Marvell, we are enabling customers to leverage NVIDIA’s AI infrastructure ecosystem and scale to build specialized AI compute.”
The Chart
Readers will see that MRVL reacted well to and broke out from an inverted head & shoulders pattern of bullish reversal in early March, even as broader markets moved in the other direction.
This almost one-month long rally developed into a rising wedge pattern of bearish reversal. The stock broke down from that pattern on Monday only to rally on the above Nvidia news on Tuesday morning. Relative strength is neutral. Most interestingly, the stock's daily moving average convergence divergence, which had been about to suffer a bearish crossover, appears to pull into what will likely be a more bullish posture after the opening bell is rung. It is my opinion that MRVL can be purchased later this afternoon should the share price close above Monday's high. I would not chase this rally early in the Tuesday session.
At the time of publication, Guilfoyle had no position in any security mentioned.
