Marvell Technology Group Ltd. (NASDAQ: MRVL) is having a rough Friday, even after delivering what looks like a stellar quarter. The stock dropped nearly 10% to $217.41, and the reason is a classic case of "good news, but not good enough."

Investors have gotten greedy. Marvell's shares have surged more than 220% over the past year, so when the company raised its fiscal 2027 and fiscal 2028 revenue outlook, Wall Street wanted even more. The market's reaction is a reminder that sometimes a great report can still disappoint if expectations have run too far ahead.

Let's break down what happened and why analysts are still bullish.

Revenue Outlook Raised

Management now expects fiscal 2027 revenue of approximately $12 billion, up $500 million from the prior outlook, and fiscal 2028 revenue of about $18 billion, up $1.5 billion. Needham noted that management guided fiscal 2028 revenue growth to more than 50% year-over-year, up from a prior outlook of 45%.

Data Center Segment Drives Growth

Rosenblatt analysts attribute the upgrade to strength in scale-out interconnect, switching, and a custom silicon ramp in the second half of fiscal 2027. Needham added that data center revenue is now expected to grow more than 60% year-over-year in fiscal 2028.

That's the engine of Marvell's growth story. The company is riding the AI wave, and its custom silicon business is a key piece of that.

Google Agreement Details

Here's the headline number that got everyone's attention: Needham noted that if all milestones under Marvell's previously announced commercial agreement with Google are achieved, it could represent up to $120 billion of revenue over the next six years.

That's a massive opportunity, but it's also a long-term one. The market's impatience stems from the fact that these big AI deals, like the one with Google, are expected to contribute more meaningfully only in later years. Meanwhile, rapid growth in lower-margin custom AI chips is temporarily pressuring gross margins.

In short, the AI business is getting stronger, but investors are now demanding faster profitable growth and believe much of the good news is already priced into the stock.

Analyst Day Set for October

Rosenblatt pointed to Marvell's Analyst Day in early October, when management is expected to provide additional detail on long-term revenue and margin targets. That could be a catalyst for the stock if the company can reassure investors about the path to profitability.

Both Rosenblatt and Needham reiterated Buy ratings and set $300 price targets. Rosenblatt's target is based on 28 times their fiscal 2029 earnings-per-share framework, while Needham's is based on approximately 30 times their calendar 2028 non-GAAP EPS estimate of $10.25.

So, is the stock a buy after this dip? The analysts think so, but the market is clearly nervous. The next few months will be crucial as Marvell works to prove that its growth can translate into fatter margins.