March 6 (Reuters) – Marvell Technology shares surged nearly 12% before the opening bell on Friday as investors bet on strengthening demand for its AI-focused custom chips and interconnect technologies following an upbeat long-term forecast.
AI‑chip spending has accelerated industry-wide. Broadcom, a key supplier of custom accelerators and networking silicon, this week projected more than $100 billion in AI chip sales next year, underscoring demand widening beyond Nvidia and deepening hyperscaler build-outs.
Marvell on Thursday said it expects fiscal 2028 revenue to grow nearly 40% to $15 billion, above analysts’ average estimate of $12.92 billion, according to LSEG data. It also raised its fiscal 2027 outlook to more than 30% year-over-year growth, nearing $11 billion.
“Emphatic long-term guidance is credible and worth buying in (the stock),” said Morningstar analyst William Kerwin.
Capital spending on AI infrastructure by Alphabet, Meta, Microsoft and Amazon is expected to exceed $630 billion this year, boosting demand for Marvell’s custom ASICs and high-speed interconnect technologies that shuttle data between AI processors, memory and servers. That spending is “still growing massively,” President and COO Chris Koopmans said.
ASICs, or application‑specific integrated circuits, are chips tailored for a single function or custom workload, offering higher efficiency than general‑purpose graphics processing units.
“We expect further penetration of custom XPUs at large AI customers like AWS and Microsoft, along with greater optical content in data centers, over the next five years,” Kerwin added.
For the first quarter, Marvell forecast revenue of $2.40 billion, plus or minus 5%, above estimates of $2.27 billion, with contributions from newly acquired Celestial AI and XConn Technologies.
Analysts say Marvell is set for a strong run in its data-center business, on rising demand for its optical DSP chips that power high-speed links inside AI servers and a multiyear ramp-up in custom AI processors tracking ahead of earlier expectations.
Marvell trades at a 12-month forward price-to-earnings ratio of 19.99, below Broadcom’s 25.31, LSEG data showed.
(Reporting by Rashika Singh in Bengaluru; Editing by Maju Samuel)
