Marvell Technology, Inc. MRVL has been on a remarkable run, with its stock surging 70.4% over the past six months — far outpacing the S&P 500’s 12.4% gain and the Zacks Electronics - Semiconductors industry’s 32.4% rise. The stock has also outperformed industry giants like Broadcom Inc. AVGO, Cirrus Logic, Inc. CRUS and Applied Materials, Inc. AMAT, reinforcing its position as a leader in AI-driven semiconductor innovation.

Six-Month Price Return Performance

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With such a massive rally, some investors may wonder if it’s time to take profits or hold for further gains. The answer is clear — Marvell’s AI-driven growth, custom silicon dominance and strong financial execution make it a must-buy for long-term investors.

Marvell’s AI Breakthroughs Are Driving Massive Growth

The AI revolution is fueling Marvell’s rapid ascent, and the company is perfectly positioned to capitalize on this megatrend. According to MarketsAndMarkets, the global AI chip market is projected to expand at an annualized rate of 20.4%, reaching $311.58 billion by 2029. This rapid expansion translates into explosive demand for AI-powered data center infrastructure, an area where Marvell is a critical supplier.

Marvell’s electro-optics solutions, including PAM DSPs and ZR interconnects, are vital for high-speed, energy-efficient data transmission within AI-driven data centers. As AI adoption skyrockets across cloud computing, autonomous vehicles and advanced networking, the demand for Marvell’s high-performance interconnects and custom silicon solutions will only intensify.

Custom Silicon: Marvell’s Secret Weapon in AI Data Centers

Marvell’s custom silicon business is a game-changer, particularly in the booming data center market. Cloud service providers rely on Marvell’s highly specialized chips to optimize AI compute efficiency, networking speed and energy consumption.

In the third quarter of fiscal 2025, Marvell’s data center segment posted robust growth, driven by the rising adoption of AI-specific compute solutions. Management forecasts sequential revenue growth in the low-to-mid 20% range for the fourth quarter, a strong indicator of sustained AI-driven demand.

Additionally, Marvell is leading the charge in next-gen data center connectivity with investments in PCIe Gen 6 retimers and advanced interconnect technologies, ensuring faster and more reliable AI workloads. These advancements solidify Marvell’s role as a cornerstone of AI infrastructure, giving it a long-term competitive advantage.

Marvell’s Financial Resilience Amid Market Challenges

Despite ongoing macroeconomic pressures, Marvell continues to execute flawlessly. The company exceeded the Zacks Consensus Estimates for revenues and earnings per share (EPS) in the third quarter of fiscal 2025, showcasing its ability to navigate industry headwinds while maintaining profitability.

While fiscal 2025 revenue and EPS growth are expected to grow in the single-digit percentage range, analysts forecast a massive acceleration in fiscal 2026, with projected 41% revenue growth and a 74% surge in EPS.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The long-term expected EPS growth rate for Marvell is currently pegged at 33.7%, way higher than the Electronics – Semiconductors industry average of 17.9%. It has also outperformed the Zacks Consensus Estimates for EPS in each of the trailing four quarters, with an average surprise of 3.83%, reinforcing its strong financial execution.

High Growth Potential Justifies Marvell’s Premium Valuation

Marvell trades at a forward 12-month price-to-earnings (P/E) ratio of 39.9, higher than the industry average of 33.31. The stock’s forward 12-month price-to-sales (P/S) ratio of 11.6 is also way higher than the industry average of 8.43. While some may view this as expensive, it’s important to recognize that market leaders in high-growth industries often command premium valuations.

Forward 12-Month P/S Ratio

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With its dominance in AI-driven semiconductors, custom silicon and cloud data center solutions, Marvell’s long-term revenue trajectory justifies its valuation. Investors looking to capitalize on the AI semiconductor boom should view any short-term pullbacks as buying opportunities.

Conclusion: Buy Marvell Stock for Long-Term AI Gains

Marvell’s 80% rally is just the beginning of what could be a multi-year growth story fueled by AI innovation. The company’s leading position in AI infrastructure, custom silicon and next-generation data center solutions make it a must-own stock for investors betting on the future of AI-driven computing.

While the stock trades at a premium valuation, its explosive growth prospects and strong financial execution more than justify the price. For those looking to ride the AI and semiconductor revolution, Marvell Technology remains a top-tier investment. Currently, MRVL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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