Marvell Shares Tumble Amid Concerns Over Next-Gen AI Ramp

May 30 - Shares of Marvell Technology MRVL slid 4% in premarket trading Friday after the company posted first-quarter results and updated its guidance.

The specialty semiconductor firm reported a GAAP gross margin of 50.3% and a non-GAAP gross margin of 59.8%. GAAP diluted EPS came in at $0.20, with non-GAAP diluted EPS of $0.62. Cash flow from operations was $332.9 million, bolstered by its positioning in the custom AI infrastructure market, which may drive further growth.

Bank of America analyst Vivek Arya, who rates the stock Buy with a $72 target, said confirmation of Marvell's pipeline ahead of its June 17 AI Investor Event could boost confidence. However, limited earnings revisions are likely to keep the shares in check near term, as the Microsoft MSFT chip deal won't begin until 2026.

Needham's N. Quinn Bolton trimmed his price target to $85 from $100, citing valuation compression. He maintained a Buy rating, noting Marvell has addressed next-generation XPU concerns and that its Microsoft and Amazon AMZN agreements remain intact. The company has secured 3 nm wafer and packaging capacity for production in calendar 2026 and expects custom XPU revenue to grow in fiscal 2026 and beyond.

Morgan Stanley's Joseph Moore said his team may have overestimated pricing or volumes for Marvell's custom AI business with Amazon's Trainium processors, but added other segments are performing well and management remains confident in its AI roadmap. Shares of peers Broadcom AVGO and Nvidia NVDA also inched lower.