Marvell shares surge as it forecasts strong Q4 amid AI demand

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Marvell shares surge as it forecasts strong Q4 amid AI demand

stock :: 2024-12-04 :: source - reuters

Win Image by StartupStockPhotos / Pixabay

By Reuters

(Reuters) - Marvell Technology's (MRVL) Technology's shares jumped over 13% in premarket trading on Wednesday after the chipmaker's optimistic forecast boosted investor confidence in AI-related stocks.

The company, which produces custom AI chips for major cloud provider that help GenAI speedily process large amounts of data, forecast fourth-quarter revenue above estimates on Tuesday.

"Marvell is capitalizing on a massive artificial intelligence chip opportunity with a burgeoning custom accelerator portfolio and a dominant optical chip position," Morningstar analysts said in a note.

The company's market capitalization could increase by more than $11 billion if premarket gains hold, pushing its valuation to a record $94.37 billion.

"We are seeing strong custom AI demand continue into the fourth quarter and have secured supply chain capacity to support our customers' growth forecast," CEO Matt Murphy said on Tuesday.

Reuters reported on Tuesday that CEO Murphy is being considered a potential candidate for the position of CEO at the struggling chipmaker Intel (INTC). However, Murphy said during a post-earnings call that he remains "100% focused on Marvell."

Marvell's shares have climbed nearly 60% this year, driven by Wall Street's AI-focused "picks-and-shovels" trade that has propelled chipmakers' stocks to new highs.

Efforts by hyperscalers such as Microsoft (MSFT), Meta (META), and Alphabet (GOOG, GOOGL) to reduce reliance on AI chip leader Nvidia's (NVDA) supply-constrained processors have benefited companies like Marvell and its larger competitor, Broadcom (AVGO).

The company's data center segment, which includes custom chips, saw 98% growth to a record $1.10 billion in the third quarter, accounting for over 70% of total revenue in the quarter, compared to about 40% in the year-ago period.

Other chipmakers also saw gains, with Broadcom up nearly 2% premarket, while Nvidia, Intel, AMD (AMD), and Qualcomm (QCOM) rose between 0.5% and 1.5%.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Tasim Zahid)