Wall Street is bullish on Marvell despite reports of key losses
When one of your most formidable rivals in the semiconductor space is Broadcom (AVGO), the nearly $2-trillion behemoth, you're going to need all the big hyperscaler clients you can get.
Such is the case for Marvell Technology (MRVL), which works in the same application-specific integrated circuits (ASICs) space as the semiconductor giant.
Which is why investors took notice last week when The Information and Benchmark Equity Research both reported that Marvell has recently lost two of the biggest hyperscalers in the world: Microsoft (MSFT) and Amazon (AMZN).
The reports have sent Marvell's stock down 7.7% over the past five trading sessions.
But in an interview with CNBC's Jim Cramer on Tuesday, Marvell CEO Matt Murphy denied the reports.
“I can tell you this, from Tuesday to Friday, nothing changed,” Murphy said. “We didn’t lose any business.”
Murphy was referring to the fact that the two reports were published in the days after the company reported better-than-expected quarterly earnings.
A spokesperson for AWS also denied the reports in a statement to Barron's, saying that Marvell remains "a partner of AWS, including as a valued silicon supplier."
Stifel analysts, led by Tore Svanberg, also came to Marvell's defense in a client note on Tuesday, insisting that the news reports "are without merit."
"We also believe reports from the market landscape yesterday suggesting Marvell is not participating in its lead ASIC customer's next generation platform are misleading," Svanberg added.
On Wednesday, Svanberg reiterated a Buy rating and maintained a $114 price target for MRVL shares, calling Marvell "one of the only vendors offering a comprehensive, vertically integrated connectivity stack for the full architecture of modern AI systems."
Despite its stock falling 16.3% for the year, Stifel isn't alone in remaining bullish on Marvell.
Raymond James initiated coverage on the company last month with a Strong Buy rating, along with a $121 price target. The analysts, led by Simon Leopold, called Marvell "well positioned for AI-driven demand and advanced packaging trends."
"The stock faces somewhat more controversy than the leading AI GPU and ASIC suppliers, but Marvell benefits directly from the expansion of AI-infrastructure spending," Leopold said.
Of the 18 Wall Street analysts that cover MRVL, 17 have raised their price targets according to the latest data from last week.
UBS analyst Timothy Arcuri, who raised his price target to $110 from $105 last month, indicated that he was "tweaking estimates higher to reflect a more bullish near-term view of MRVL's optics business and also adding some more MSFT-related ASIC revenue starting in late 2026 and into 2027."
He hasn't updated his rating after the reports alleging that Marvell has lost the Microsoft business.
But because Marvell's stock has fallen this year despite the love it's getting from Wall Street, Murphy suggested to Cramer that it creates a fortuitous time for investors to take a stake in the company.
“The silver lining is there’s a massive opportunity right now to buy Marvell,” he said. “If you just look at where we trade today relative just to the semiconductor index, we’re trading below the average multiple. We are not an average company.”