Marvell Technology, Inc. (MRVL) is getting some love from Wall Street heading into earnings season. The chip designer's shares climbed Monday after Microsoft Corp (MSFT) announced it's expanding deployment of Marvell's LiquidSecurity hardware security modules across Europe. Nice timing, considering Marvell reports earnings Tuesday.
The real story here is what analysts think Marvell will say about its AI and datacenter business, which has become the company's growth engine. JPMorgan's Harlan Sur maintains his Overweight rating and expects the October quarter to meet or slightly beat consensus estimates. More importantly, he thinks the January-quarter guidance will come in above what most people expect.
The Datacenter Story Gets Better
Sur is projecting revenue north of $2.25 billion, powered by quarterly growth of 18-20% or more in the datacenter segment. What's driving that? A pretty impressive list: Marvell's 1.6T DSP chips ramping at NVIDIA (NVDA), strong 800G DSP demand from Google, reacceleration of Amazon's Trainium 2 ASIC program, initial XPU attach ASIC deployments, and solid storage controller demand.
The Amazon Web Services relationship looks particularly promising. Marvell's work on the Trainium 3 chip built on 3nm technology is progressing on schedule, according to Sur, with a ramp expected in the second quarter of 2026. That could support growth of 20-30% or more in Marvell's AI ASIC business next year, potentially pushing revenue past the $2 billion mark.
Microsoft's Maia 3nm AI ASIC program is also moving forward, with a ramp expected in the second half of 2026, the analyst notes.
Custom Chips and Optical Growth
Rosenblatt analyst Kevin Cassidy also expects Marvell to slightly beat estimates, supported by strength in both AI and non-AI optical markets. He points out that management had previously warned about weaker sequential Custom IC revenue, with growth resuming in the fourth quarter of 2026. That pattern would mean second-half Custom IC revenue outpacing the first half, which should calm investor nerves about whether Marvell is losing competitive ground.
Investors will be watching closely for updates on the 20 XPU and XPU-Attached Custom ICs Marvell has announced. Meanwhile, Cassidy expects the optical business, which represents roughly 50% of datacenter revenue, to drive growth through fiscal 2027.
Price Action: MRVL shares traded up 2.45% to $91.59 on Monday.
