Marvell: AI Growth 'Stalls', Where is the Next 'Trump Card'?

Marvell Technology (MRVL.O) released its Q1 2026 fiscal year earnings (ending April 2025) after U.S. market close on May 30, Beijing time:

1. Overall Performance: Revenue of $1.9 billion, up 4.3% QoQ, largely in line with expectations of $1.88 billion. The $80 million QoQ revenue increase was primarily driven by data center and AI businesses.

Adjusted gross margin was 59.2%, down 0.3 ppts QoQ. The declining margin trend stems from lower-margin custom ASIC businesses. Structural growth in these segments continues to pressure overall margins.

2. Data Center: Revenue of $1.44 billion, up 5.5% QoQ, fueled by AI demand. Data center now accounts for 76% of total revenue. Dolphin Research estimates $830 million in AI revenue this quarter, up $90 million QoQ, while non-AI segments saw slight declines.

3. Next Quarter Guidance: Revenue of $2 billion matches consensus, with growth again led by data center/AI; GAAP gross margin stable at 50.5%. Dolphin projects adjusted gross margin at 59.1% (-0.1 ppt QoQ).

Dolphin Research View: Meets expectations but lacks positive catalysts.

As markets focus on AI-driven growth potential, attention on$Marvell Tech(MRVL.US) centers on sequential revenue momentum.

While current results and guidance met expectations, the absence of accelerating growth disappoints investors expecting valuation support.

Both total and data center revenue growth rates are decelerating. Markets anticipated faster growth to justify valuations.

This earnings report suggests the current product cycle (Amazon's Trainium 2 chips) is peaking, with new products needed for the next leg up. Despite hitting targets, growth concerns persist.

Key focus areas for Marvell: AI business, ASIC clients, and China exposure:

1) AI Business: Unlike Nvidia's sovereign AI narrative, Marvell remains tied to cloud providers' capex cycles. While cloud capex dipped QoQ, Marvell still grew data center revenue 5%, gaining ASIC market share as expected.

The core thesis of "custom ASICs capturing share" remains intact, but slowing sequential growth ($200M-$200M-$90M last 3 quarters) weakens confidence.

2) ASIC Clients: Amazon's Trainium 2 drives current AI growth, but momentum appears limited. Next catalysts depend on Microsoft's Maia Gen2 and Amazon's Trainium 3 in 2026.

3) China Business: At 40% of revenue, China remains Marvell's largest market. Postponed investor day (now 2026) and tech tensions introduce uncertainty, though guidance shows no immediate impact.

At $56.5B market cap, Marvell trades at ~30x adjusted 2026 P/E (+44% revenue, -1.1ppt margins, 10.2% tax rate).

With AI growth slowing between product cycles and China risks lingering, Marvell lacks near-term catalysts beyond future ASIC launches.

For Dolphin Research's full analysis, see below:

I. Marvell Business Overview

Marvell expanded from storage tech into data centers via acquisitions. Data center now drives ~75% of revenue:

1) Data Center (75%): High-growth segment powered by ASIC demand. Includes SSD controllers, Ethernet switches (Innovium), and custom chips (AWS).

2) Other (25%): Legacy segments like 5G infrastructure (declining), consumer electronics, and automotive/industrial (minor).

II. Financials: In-Line Results

2.1 Revenue

$1.9B revenue (+4.3% QoQ) matched consensus. The $80M QoQ increase (vs. prior $200M) fuels growth concerns.

2.2 Margins

GAAP gross margin at 50.3%; adjusted at 59.2% (-0.3ppt QoQ). Structural pressure from ASIC mix continues.

2.3 Opex

Flat QoQ at $682M. R&D up 6.6% to $500M (26.8% of revenue); SG&A down 6.8% to $186M (9.8%).

2.4 Net Income

Adjusted net income flat QoQ at $391M. Acquisition costs historically distort GAAP results.

III. Segment Details: Waiting for New Products

3.1 Data Center

$1.44B (+5.5% QoQ), driven by AI ASICs. Dolphin estimates $830M AI revenue (+$93M QoQ).

Growth slowing ($200M→$200M→$93M) despite cloud share gains. Next catalysts: Microsoft Maia Gen2/Amazon Trainium 3 in 2026.

3.2 Other Segments

Enterprise Networking: $178M; Carrier Infrastructure: $138M (both rebounding). Consumer: $63M (+50% YoY). Auto/Industrial: $76M (-2.4% YoY).