Citi maintained its Buy rating and $91.00 price target for Marvell (NASDAQ:MRVL) Technology Group Ltd. (NASDAQ:MRVL), a semiconductor company. The firm's positive outlook is based on Marvell's performance above consensus for the calendar year 2025 earnings per share (EPS) following July-quarter results.
Marvell is expected to capitalize on the robust investments in artificial intelligence (AI) by scaling its AI application-specific integrated circuit (ASIC) business. The company has four AI ASIC projects in the pipeline, with two currently ramping up, one anticipated to ramp in calendar year 2025, and another in 2026.
Citi also announced a positive catalyst watch ahead of the upcoming Citi Technology Conference. During the event, which is scheduled for next week, Citi will host a fireside chat with Marvell's CEO, Matt Murphy.
Analysts predict that Murphy will present an optimistic view on the company's AI growth, potentially exceeding previously set AI sales targets for 2024 and 2025. Additionally, a recovery is expected across all non-AI end markets in the second half of 2024.
The firm's analysis indicates that Marvell's stock typically performs well when all its end markets are moving in a positive direction.
This trend is likely to continue, bolstered by the company's strategic initiatives in the AI sector and the anticipated market recovery.
Marvell Technology Group Ltd . showcased a strong performance in the second quarter of fiscal year 2025, with revenue surpassing expectations at $1.27 billion. This robust growth was primarily driven by the data center end market, which reported a record revenue of $881 million, reflecting a noteworthy year-over-year increase.
The company's future appears promising with an expected 14% sequential growth in consolidated revenue for the third quarter, largely propelled by the data center AI market.
Marvell Technology also reported a GAAP gross margin of 46.2% and a non-GAAP gross margin of 61.9% in Q2. The company managed to reduce inventory by nearly 20% YoY and generated $306 million in cash from operations. Looking forward, the third-quarter revenue forecast is approximately $1.45 billion, with a GAAP gross margin of 47.2% and a non-GAAP gross margin of 61%.
In terms of future developments, Marvell Technology anticipates significant sequential growth across all end markets in the third quarter and is confident in exceeding its full-year AI revenue target. The company also has plans to increase stock repurchases in the third quarter.
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