Marvell (NASDAQ:MRVL) Stock Analysis: AI Expansion, Data Center Dominance, and a $140 Target—Can It Deliver?
Marvell's AI and Data Center Growth: A Game-Changer for NASDAQ:MRVL?
Marvell Technology (NASDAQ:MRVL) is at a crucial turning point, with its Q4 and FY 2025 earnings release set for March 5th. With shares currently trading at $126.80, the stock has already surged 36% over the past year, significantly outperforming the S&P 500’s 17% gain. However, the question remains—can Marvell sustain this momentum and hit the projected $140 price target?
At the core of Marvell’s bullish outlook is AI-driven hyperscaler demand, its dominance in the data center space, and a strategic partnership with Amazon Web Services (AWS). The company’s custom silicon, particularly its AI-focused ASICs, positions it as a major competitor to Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), both of which dominate the GPU sector.
With data center investments expected to hit $225-$240 billion in 2025, up 40% year-over-year, Marvell is uniquely positioned to benefit. The company is aggressively scaling AWS Trainium 2 chips, an AI solution that competes directly with Nvidia’s H100 and AMD’s MI300X. This puts MRVL in the spotlight for investors looking to capitalize on AI beyond just GPU manufacturers.
Marvell’s AI-Powered Revenue Surge: How Big Can It Get?
Marvell’s Q3 2025 earnings (reported in December 2024) provided an early glimpse into its AI-driven revenue expansion. The company delivered $1.52 billion in revenue, representing a 19% sequential increase, largely due to surging demand for custom AI silicon and interconnect solutions. CEO Matt Murphy emphasized that AI-driven data center revenue is expected to grow another 19% in Q4 2025, pushing full-year AI-related revenue to $4.2 billion.
The bigger story here is Marvell’s three-year revenue forecast. Analysts expect AI-related revenue to reach $7.2 billion by FY 2027, reflecting a 31% CAGR (compound annual growth rate). This growth is supported by hyperscaler CAPEX expansion, as major cloud players (Amazon, Microsoft, Google, and Meta) continue to boost their AI computing power.
While Marvell is not competing head-on with Nvidia’s high-end GPUs, its custom silicon strategy is a strong alternative. Companies looking for cost-efficient, lower-power AI computing solutions are increasingly turning to Marvell’s ASICs and DPUs, particularly for training large AI models.
Marvell’s AWS Partnership: A Game-Changer?
One of Marvell’s strongest growth drivers is its expanded partnership with Amazon Web Services (AWS). The company has played a key role in developing AWS Trainium 2, Amazon’s second-generation AI accelerator, which offers superior cost efficiency compared to Nvidia’s H100.
AWS has aggressively ramped up its AI compute power, recently announcing a five-year strategic collaboration with Marvell, focusing on custom silicon production for Amazon’s next-generation Trainium 3 chips. This is a huge win for Marvell, as it ensures a steady revenue stream from AWS, reinforcing its role in hyperscaler AI computing.
But AWS isn’t the only driver of Marvell’s AI business. The company’s 800G PAM DSP chips (designed for AI-driven cloud interconnects) are seeing strong adoption across data centers. With hyperscalers deploying larger AI models, high-bandwidth interconnect solutions are essential. In Q3 2025, Marvell’s electro-optical business grew double digits, signaling strong demand heading into 2025.
Can Marvell Expand Beyond AI? The Non-AI Segments Are Recovering
While AI is the dominant growth driver, Marvell’s non-AI segments are also rebounding. In Q3 2025, Carrier and Enterprise Networking showed double-digit sequential growth, indicating that enterprise IT spending is recovering.
Looking ahead to Q4 2025, analysts expect total revenue of $1.8 billion, in line with guidance. However, given the momentum in AI and the early recovery in networking, Marvell could exceed expectations.
The key question is whether AI-related growth will offset potential weaknesses in other segments. Carrier infrastructure and storage remain relatively weak, but Marvell’s data center exposure (now 72.6% of total revenue) minimizes this risk.
Marvell’s Profitability and Valuation: Is MRVL Stock Undervalued?
Marvell is not just growing revenue—it’s also improving its profitability. Gross margins are projected to decline slightly in Q4 (by ~50bps to 60%), mainly due to the custom silicon ramp-up. However, analysts expect operating margins to improve from the low 30% range to 40% in the long term, as the company benefits from strong operating leverage.
Looking ahead, FY 2027 EPS is expected to hit $4.70, up from $2.80 in FY 2025. This implies a high-growth trajectory, making Marvell one of the more attractive semiconductor plays in the market.
From a valuation standpoint, Marvell is still reasonable despite its rally. Using consensus EPS forecasts ($2.8, $3.7, and $4.7 for FY 2025, FY 2026, and FY 2027, respectively) and a 9% cost of equity, Marvell’s fair value estimate sits at $102 per share. However, given the rapid AI-driven expansion, many analysts assign a $140 price target, representing an 11% upside from current levels.
For investors looking at the AI infrastructure boom, Marvell offers an attractive alternative to Nvidia and AMD. While NVDA and AMD trade at over 30x forward earnings, Marvell is currently priced at ~20x EV/EBITDA for FY 2027, making it a more reasonable AI investment.
The Risks: Will China and Tariffs Derail Growth?
While Marvell has strong growth drivers, there are risks. One of the biggest concerns is geopolitical risk. China accounts for 43% of Marvell’s total revenue, and any trade restrictions or tariffs could impact sales.
Additionally, AI CAPEX spending could slow down if macroeconomic conditions weaken. While the AI infrastructure boom looks strong for 2025, it’s unclear whether this pace of investment will continue into 2026 and beyond.
Another risk is margin pressure. While Marvell is ramping up custom silicon production, its gross margins are expected to be lower than in previous years due to higher R&D costs. However, as production scales, margin expansion should follow.
Final Verdict: Is Marvell (NASDAQ:MRVL) a Buy at $126.80?
Marvell Technology is one of the strongest AI infrastructure plays outside of Nvidia and AMD. With AI-driven revenue expected to hit $7.2 billion by FY 2027, Marvell is poised for rapid growth, fueled by hyperscaler CAPEX expansion, custom silicon partnerships, and data center interconnect demand.
At $126.80, Marvell stock remains reasonably valued, trading at 20x EV/EBITDA. Analysts expect shares to reach $140, implying 11% upside from current levels. Given the long-term AI growth potential, Marvell looks attractive for investors willing to hold through potential volatility.
Final Rating: Strong Buy
For those looking to invest in AI infrastructure and custom silicon, Marvell (NASDAQ:MRVL) remains one of the most compelling opportunities in the semiconductor space.
