Key Takeaways:
- Marvell posted record Q2 revenue of $2.74 billion, up 36.5% year over year
- Q3 guidance of $3.15 billion topped the $3.03 billion consensus
- Shares fell 10.28% to $216.62 as investors wanted a bigger beat
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Marvell drops 10% after earnings as Cramer flags October investor day
Marvell Technology reported record revenue of $2.74 billion, yet shares fell 10.28% to $216.62 as investors judged the beat against an AI-fueled rally that had already priced in faster growth.
"The sell-off is a case of high expectations," Jim Cramer said on CNBC, framing the stock as expensive unless the company's October 6 investor day delivers on its raised growth targets. "It's expensive unless everything works, and then it is cheap."
Data-center revenue climbed 46% to $2.17 billion, accounting for 79% of total sales. Adjusted EPS came in at $0.94, up 40% year over year and edging the $0.93 consensus. Management guided third-quarter revenue to about $3.15 billion, plus or minus 5%, above the $3.03 billion analysts expected, with adjusted EPS of $1.10 at the midpoint versus a $1.07 consensus.
The company also raised its longer-term outlook, lifting fiscal 2027 revenue guidance to roughly $12 billion from $11.5 billion and fiscal 2028 to $18 billion from $16.5 billion, with data-center sales expected to grow more than 60% in both years. CEO Matt Murphy said AI-related bookings remain exceptionally strong and that growth should accelerate through the rest of fiscal 2027.
The drop reflects an expectations gap rather than a weak quarter. Shares had climbed about 150% year to date before the report, trading above 70 times forward earnings; Friday's decline brought the multiple to roughly 50 times. Investors also appeared disappointed that Marvell's expanded custom-chip partnership with Alphabet's Google may not add significant incremental revenue until fiscal 2029, while the growing mix of custom silicon raised margin concerns. Non-GAAP gross margin guidance of 58% at the midpoint for the third quarter is down 90 basis points sequentially.
The decline tests whether the AI infrastructure thesis holds at current valuations. Investors will watch the October 6 investor day, where management plans to outline its extended AI roadmap and update when custom-chip production scales up.
This article is for informational purposes only and does not constitute investment advice.
[1] Jim Cramer Says Marvell Is Expensive Unless Everything Works, and Then It Is Cheap[2] US Stocks Fall as Philadelphia Semiconductor Index Drops Over 3%; Cloud Service Providers Buck Trend, Optical Communication Stocks Lead Losses; Marvell Falls 10% Post-Earnings, Nvidia Drops 4%[3] Marvell Shares Drop 7.6% After Hours Even as Revenue Hits Record $2.74 Billion[4] Marvell (MRVL) Stock Falls 10% After Q2 Earnings: Buy the Dip?[5] Marvell Guided to 50% Growth and the Stock Dropped 6%. Every AI Investor Should Read That Warning.
