---
title: "MRVL: In the AI inference era, is connectivity more valuable than compute?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/41191713.md"
description: "MRVL released its FY2027 Q1 results after-hours on May 28 (Beijing time). The quarter ended Apr 2026.1. Revenue: $2.42bn (+9% QoQ), in line with consensus ($2.41bn). The ~$200mn sequential uplift was almost entirely driven by Data Center.2. GPM: 52.1% this quarter, up 40bps QoQ. Margin is affected by amortization of acquired intangibles and other items..."
datetime: "2026-05-28T02:35:46.000Z"
locales:
  - [en](https://longbridge.com/en/topics/41191713.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/41191713.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/41191713.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# MRVL: In the AI inference era, is connectivity more valuable than compute?

Marvell reported FY2027 Q1 (quarter ended Apr 2026) after the US close on May 28 Beijing time.

**1\. Revenue: $2.42bn, +9% QoQ**, in line with the Street ($2.41bn). Nearly all of the ~$200mn sequential increase was driven by data center.

**2\. GPM**: GAAP GPM was 52.1%, up 40bps QoQ. Because GAAP margins are affected by acquisition-related amortization, the reported GPM does not fully reflect underlying operations. **Ex-amortization, adjusted GPM was 58.3%, down 20bps QoQ**. Lower-margin custom ASIC weighed on the mix, keeping margins on a slight downtrend.

**3\. Data center: key focus area**. **Segment revenue was $1.83bn, +11% QoQ**, mainly on the strength of **optical interconnect**. Data center accounted for 75.8% of total.

Previously, investor attention within AI centered on custom ASIC, but Marvell’s role in Amazon’s Trainium underwhelmed. The company still supplies Trainium 2.5, but Alchip now leads on the latest Trainium 3, which weighed on sentiment at the time.

**As AI shifts to inference, pure compute matters less, and hyperscalers emphasize memory, CPU and interconnect.** Marvell is relatively strong in interconnect, and robust demand here should underpin high growth even if ASIC is soft.

**4\. Next-quarter guide: revenue $2.7bn, above the Street ($2.61bn)**, driven mainly by stronger interconnect demand. **GAAP GPM 52.1%–53.1%**, roughly stable.

**5\. FY outlook: raised FY2027 revenue to $11.5bn (from $11.0bn), +40% YoY.** The lift is primarily from interconnect growth now guided at 70%+ (prior 50%+), with ASIC growth 20%+ (unchanged). **Raised FY2028 revenue view to $16.5bn (prior $15.0bn), +43% YoY.**

**Dolphin take: well-positioned for the AI supercycle, interconnect drives growth**

**Results broadly matched expectations**, with growth largely from data center interconnect. **Ex-amortization, adjusted GPM was 58.3%, down 20bps QoQ.**

Last quarter the company simplified reporting into two buckets (data center; communications & other). **Data center was the main growth engine, up 11% QoQ.** ASIC was relatively soft, and growth was led by interconnect demand.

Marvell guided next-quarter revenue to $2.7bn, +11% QoQ, ahead of the Street ($2.61bn). With full-year guidance now provided, the quarterly guide is less consequential.

**The recent share rally reflects a shift in the narrative.** Earlier, investors worried about Trainium share losses, 1.6T DSP ramp timing and competition from Broadcom. **But in the optical supercycle, even if custom ASIC lags, interconnect products (e.g., DSP) can still drive high, visible growth.**

**In the inference phase, AI infra = memory + XPU + interconnect.** Marvell leads in optical/electrical connectivity and has bolstered AI networking via M&A. **Sell-side estimates had already moved up, and the raised FY2027/28 revenue targets to $11.5bn/$16.5bn broadly meet those expectations.**

Beyond headline results, key growth levers include:

**1) Rack-scale networking: a string of recent deals** for XConn (PCIe/CXL switching), Celestial AI (photonic interconnect) and Polariton (silicon photonics). **Together they complete three AI network layers — Scale-Out, Scale-Up, and Scale-Across — delivering a full high-speed interconnect stack from in-rack to cross–data center.**

**2) CXL memory expand/pooling (Structera): not for data storage per se,** but adds a tier within the active memory hierarchy. AI inference requires massive KV cache; HBM is costly and DRAM is capacity-limited, necessitating NAND/SCM-based expansion.

Marvell’s CXL portfolio spans **Structera A, Structera X and Structera S**, serving as near-memory accelerators, memory expansion controllers, and memory pooling/switching, respectively.

**3) Full-stack optical interconnect**

**Interconnect is evolving** from copper to **pluggable optics (where PAM4 DSP is relatively leading)** to LPO/OBO (onboard optics), then CPO (co-packaged optics), and eventually all-optical. Marvell is positioned at each stage.

**For today’s Scale-Out use cases, pluggable optics remain dominant.** NVIDIA and Google largely use pluggable modules, while CPO is expected to enter small-batch use in 2H26.

Marvell’s PAM4 DSP is relatively leading in pluggable optics. **Management noted the 1.6T solution has entered production and will ramp quickly in FY2027,** a major near-term growth driver for interconnect. Beyond DSP, Marvell has active programs in LPO/OBO, CPO and all-optical.

With a current market cap of $173.7bn, **shares imply ~37x FY2028 adjusted net income** on assumptions of ~45% revenue CAGR, 57.5% adjusted GPM and 11.5% adjusted tax rate.

**This print is ‘okay’ overall.** With annual guidance set, the quarter matters less. The FY2027/28 revenue views broadly match already-raised consensus.

**The rich multiple embeds high expectations, and the updated annual guide offered limited upside surprise,** which could leave the market mildly underwhelmed near term.

**Still, the new guide implies 40%+ growth for the next two years, underscoring sustained high growth.** Beyond interconnect, ASIC, CXL memory expand/pooling (Structera) and rack-scale solutions provide medium- to long-term optionality, keeping the high-growth narrative intact.

Detailed analysis of Marvell’s (MRVL.O) results below:

**I. Marvell’s business**

Marvell started in storage and expanded through a series of tuck-in M&A. Data center is now its largest revenue stream.

Business mix:

**1) Data center (~75%)**: **high-growth, propelled by DC and ASIC demand, and the market’s main focus.** Includes optical/electrical interconnect, SSD controllers and custom ASICs (e.g., AWS Trainium, Google Axion CPU), deployed across cloud servers and edge.

**2) Other (~25%)**: the company consolidated enterprise networking, carrier infrastructure, consumer, and auto/industrial into ‘communications & other’.

**II. Key metrics: interconnect heating up, sequential growth accelerating**

**2.1 Revenue**

**FY2027 Q1 revenue was $2.42bn, +9% QoQ, in line with the Street ($2.41bn).** Growth was driven mainly by optical/electrical interconnect.

**2.2 Gross profit**

**Gross profit was $1.26bn, up $110mn QoQ,** with GAAP GPM at 52.1%.

**GAAP GPM is affected by acquisition amortization and does not reflect core operations.** Ex this impact, we reference adjusted GPM.

**Adjusted GPM was 58.3%, down 20bps QoQ.** Lower-margin custom ASIC continues to pressure mix and margins.

**2.3 Opex and profit**

FY2027 Q1 GAAP net income was $35mn. **Ex non-recurring items, EBITDA was $735mn, with EBITDA margin down to 30.4%,** mainly on lower adjusted GPM and higher opex.

**III. Segment performance: interconnect surging, growth drivers fully loaded**

Since 2018 Marvell has acquired Cavium, Innovium and others to enhance interconnect and ASIC capabilities. **Data center has trended higher on interconnect and ASIC demand and is the largest swing factor for results.**

**From last quarter, legacy lines were grouped under communications & other,** with enterprise, carrier, consumer, and auto/industrial each down to ~10% of mix or less.

**3.1 Data center**

**FY2027 Q1 data center revenue was $1.83bn, +11% QoQ, in line with the Street ($1.82bn),** led by optical/electrical interconnect.

Within data center, current focus is on interconnect and custom ASIC.

**1) Custom ASIC**: the largest program has been Amazon Trainium.

**Marvell still ships Trainium 2.5,** but Trainium 3 has largely shifted to Alchip, explaining recent ASIC softness.

**For FY2027, the ASIC outlook is modest at ~20% growth,** well below CSP capex growth, reflecting share loss at a key customer (Amazon).

For FY2028–29, guidance turns more constructive. **Management expects custom revenue to double in FY2028 and exceed $10bn in FY2029** (roughly consistent with a prior 20% share LT target), including Microsoft’s next-gen Maia, plus CXL and NIC attach.

**2) Interconnect: the largest DC driver**

With ASIC softer, interconnect is providing the bulk of incremental growth. **We estimate interconnect at ~$900mn this quarter, about half of DC revenue.**

In inference, it is increasingly clear that **AI infra = memory + XPU + interconnect**. **Pluggable optics remain the mainstream Scale-Out approach, and Marvell’s PAM4 DSP is relatively leading,** with programs spanning copper, LPO/OBO, CPO and all-optical.

The FY2027/28 revenue raise is mainly on stronger interconnect. **Management now guides interconnect revenue up 70%+ YoY in FY2027 (prior 50%+),** with solid momentum into FY2028.

**3) Additional growth vectors**:

**i) DC switch silicon:** post the Innovium deal, Ethernet switching competitiveness improved. FY2026 Ethernet switch revenue was ~$300mn, and is expected to reach ~$600mn/~$1bn+ in FY2027/FY2028 on AI demand.

**ii) Full network-layer stack:** recent acquisitions of XConn (PCIe/CXL switching), Celestial AI (photonic interconnect) and Polariton (silicon photonics) complete Scale-Out, Scale-Up and Scale-Across, enabling a full high-speed interconnect portfolio from in-rack to cross–data center.

**iii) CXL memory expand/pooling:** Structera A, X and S serve near-memory acceleration, memory expansion control, and memory pooling/switching.

Through these deals, Marvell now spans Scale-Out, Scale-Up and Scale-Across. **The aim is not just to sell chips, but to deliver end-to-end solutions.**

**Marvell also deepened collaboration with NVIDIA,** including **i) optics** (expanding from DSP/TIA/driver supply into silicon photonics to power Scale-Up networks); **ii) NVLink Fusion integration** (custom and networking silicon interoperating with NVIDIA infra to give hyperscalers mix-and-match flexibility); and **iii) AI-RAN** (pairing OCTEON baseband processors with NVIDIA GPUs to run 5G/6G and high-performance AI on one software-defined platform).

**As inference scales, interconnect grows more critical, lifting near-term results and reinforcing medium-/long-term growth visibility.** Near term, interconnect should drive DC upside, with ASIC, CXL memory expand/pooling (Structera) and rack-scale solutions as longer-term levers.

**3.2 Communications & other**

The company now reports a single communications & other bucket, no longer breaking out enterprise, carrier, consumer, or industrial.

**FY2027 Q1 communications & other revenue was $585mn, +28% YoY.** As data center accelerates, the mix here fell to 24%.

**For this segment, the full-year view is intact:** ~10% growth in FY2027, and low single-digit growth in FY2028.

<End here\>

Related Dolphin Research coverage on Marvell (MRVL.O):

Earnings calls:

Mar 6, 2026 call trans: [Marvell (Trans): Raised revenue guide again, second XPU to ramp in FY28](https://longportapp.cn/zh-CN/topics/39099470)

Mar 6, 2026 quick take: [Marvell: ASIC card misses, interconnect brings AI back!](https://longportapp.cn/zh-CN/topics/39096551)

Dec 3, 2025 call trans: [Marvell (Trans): AWS becomes Celestial AI’s lead lighthouse customer](https://longportapp.cn/zh-CN/topics/36868576)

Dec 3, 2025 quick take: [Marvell: M&A shores up gaps; NVIDIA ‘alt’ play gaining traction?](https://longportapp.cn/zh-CN/topics/36866810)

Aug 29, 2025 call trans: [Marvell (Trans): Still no direct response to Alchip challenge](https://longportapp.cn/zh-CN/topics/33459106)

Aug 29, 2025 quick take: [Marvell: Cloud spend loosens, why didn’t ASIC benefit?](https://longportapp.cn/zh-CN/topics/33455225)

May 30, 2025 call trans: [Marvell (Trans): AI to be half of total revenue ahead](https://longportapp.cn/zh-CN/topics/30189065)

May 30, 2025 quick take: [Marvell: AI QoQ slows; what’s the next ace?](https://longportapp.cn/zh-CN/topics/30184584)

Mar 6, 2025 call trans: [Marvell (Trans): Data center growth cracked](https://longportapp.cn/zh-CN/topics/27852608)

Mar 6, 2025 quick take: [Marvell: More AI cold water; ASIC flashing warning](https://longportapp.cn/zh-CN/topics/27847825)

In-depth:

Jan 14, 2025 deep dive: [ASIC wars: Can Marvell beat Broadcom?](https://longportapp.cn/zh-CN/topics/26604690)

Jan 2, 2025 deep dive: [Marvell vs. trillion-dollar Broadcom: Can ASIC ignite a comeback?](https://longportapp.cn/zh-CN/topics/26395071)

Risk disclosure and disclaimer: [Dolphin disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [MRVL.US](https://longbridge.com/en/quote/MRVL.US.md)

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