By Jaspreet Singh
March 5 (Reuters) – Marvell Technology forecast fiscal 2028 revenue above Wall Street estimates on Thursday, signaling robust demand for custom chips and interconnect solutions used in artificial intelligence data centers, sending its shares surging 15% in extended trading.
Growing adoption of AI tools has boosted demand for specialized chips such as Marvell’s custom application-specific integrated circuits used in advanced data centers, as well as its interconnect technologies that enable high-speed data transfer between processors, memory and servers.
Big Tech firms including Alphabet, Microsoft, Amazon and Meta are expected to spend at least $630 billion to build AI infrastructure this year, lifting demand for chips used in servers and networking equipment from companies such as Marvell.
That spending is flowing to Marvell through its data center business, President and Chief Operating Officer Chris Koopmans said in an interview.
“They’re still growing massively,” he said.
Marvell expects revenue to grow nearly 40% and approach $15 billion in fiscal 2028, above analysts’ average estimate of $12.92 billion, according to data compiled by LSEG.
The company also raised its fiscal 2027 revenue forecast to grow more than 30% year over year, nearing $11 billion, compared with its earlier expectations of about $10 billion revenue.
“We’re sitting here looking at hyperscalers (capital spending) plans for the year, and we’re able to look at our booking rate, and we feel very confident in hitting those numbers,” Koopmans said.
It expects revenue of around $2.40 billion, plus or minus 5%, for the first quarter, above estimates of $2.27 billion. The company said the quarterly forecast includes expected results of Celestial AI and XConn Technologies.
Marvell divested its automotive ethernet business last year and completed the acquisition of Celestial AI in a deal worth $3.25 billion, doubling down on photonic fabrics, a technology that uses light rather than electrical signals to connect AI chips and memory chips.
Marvell and rival Broadcom help cloud-computing companies design custom chips tailored to their data-center workloads, a fast-growing business as hyperscalers seek alternatives to Nvidia’s general-purpose AI processors.
The custom chip business amounts to roughly 10% to 15% of the company’s revenue and the company expects that to continue to grow, Koopmans said.
“Marvell’s shares like many AI-related names have underperformed the semiconductor group in the past two quarters. We think the better-than-expected results and outlook, while expected, is more of a relief for investors than confirming the near-term data center spending strength,” said Kinngai Chan, senior research analyst at Summit Insights.
Broadcom on Wednesday said it expected over $100 billion in AI chip sales next year, signaling rapid share gains in a market dominated by Nvidia, which last month reported better-than-expected results for the January quarter.
For the fourth quarter, Marvell reported a 22% increase in revenue to $2.22 billion, slightly above estimates of $2.21 billion. Adjusted earnings per share of 80 cents beat estimates of 79 cents.
Revenue in the data center segment, its largest business, rose 21% to $1.65 billion, compared with estimates of $1.64 billion.
(Reporting by Jaspreet Singh in Bengaluru, additional reporting by Max A. Cherney in San Francisco; Editing by Tasim Zahid, Alan Barona and Chris Reese)
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