On Friday, Deutsche Bank maintained a positive outlook on Marvell (NASDAQ:MRVL) Technology Group Ltd. (NASDAQ:MRVL) stock, reiterating a Buy rating and a price target of $90.00. The firm highlighted Marvell's progress in artificial intelligence (AI), noting that the company is surpassing its goals set during the AI Infrastructure Day on April 11. Marvell's growth is being driven by robust demand for its electro-optical and custom compute products.
According to Deutsche Bank, Marvell anticipates its AI-related revenue to surpass its target of approximately $1.5 billion for the fiscal year 2025, which would represent a tripling from year to year.
The electro-optical segment is expected to contribute over $1 billion, doubling from the fiscal year 2024, while custom compute is projected to reach around $0.5 billion, a significant increase from a minimal amount in the fiscal year 2024.
Marvell has observed stronger than expected demand for its electro-optical products, outperforming the company's initial forecast of growth slowing down after a strong fiscal year 2024.
The company's guidance suggested flat quarter-over-quarter performance in the first quarter, but actual results have exceeded these expectations, with the second quarter likely to follow a similar trend.
The custom compute segment is set to experience a substantial growth acceleration in the latter half of the year, bolstered by increasing and diversifying demand. Notably, initial design wins with major tech firms are on track to propel Marvell ahead of its fiscal year 2026 revenue goal of $2.5 billion. Deutsche Bank anticipates significant contributions from these partnerships, particularly with Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL), as they ramp up.
Looking further ahead, with Customer C expected to begin ramping up in calendar years 2026 and 2027, Marvell is on a steady path toward achieving a projected 20% market share of a $75 billion data center total addressable market by 2028. This outlook underscores the company's strong positioning in the rapidly expanding AI sector.
InvestingPro Insights
Marvell Technology Group Ltd . (NASDAQ:MRVL) is at the forefront of discussions following Deutsche Bank's reiteration of a Buy rating and a bullish price target. In alignment with the bank's optimism, InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, indicating a consensus belief in Marvell's financial growth trajectory. Furthermore, despite recent profitability challenges, analysts predict Marvell will return to profitability this year, a testament to its strategic positioning in the AI market and robust product demand.
From a financial data standpoint, Marvell's market cap stands strong at $63.08 billion, reflecting investor confidence. While the company's P/E ratio appears negative at -63.67, this is juxtaposed with a promising PEG ratio of 0.13, suggesting that growth expectations may justify the current valuation. Moreover, Marvell's commitment to shareholder returns is evident through its history of maintaining dividend payments for 13 consecutive years, with a recent yield of 0.33%. This dedication to dividends, coupled with a solid track record of returns over the last five and ten years, resonates with long-term investors seeking stability and growth.
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