Story Stocks^®

Marvell (MRVL +9%) is looking pretty "Marvell-ous" to investors after the semiconductor company reported Q2 (Jul) results last night. Marvell reported in-line Q2 results, but the mid-point of its Q3 (Oct) revenue guidance was above range. Given some difficult conditions in several of its markets in recent quarters, investors like what they see with this report.

• Data Center, which is Marvell's largest market at 69% of JulQ sales, segment revenue jumped 92% yr/yr and 8% sequentially to a record $880.9 mln, a bit above prior guidance of mid-single digit growth sequentially. These above-guidance results were driven by strong demand for its electro-optics products, custom silicon beginning its anticipated ramp, as well as growth in its storage and switch revenue.
• Specifically, within its custom silicon business, Marvell noted that, as investment in AI and accelerated computing continues to surge, Tier 1 cloud providers are increasingly focused on using custom silicon to improve their data center TCO and drive differentiation. Cloud customers are partnering with companies like Marvell, who have extensive experience in delivering multiple generations of high-volume, high-complexity chips.
• Marvell is forecasting Data Center revenue growth to accelerate in Q3 into the high teens sequentially with the largest contributor being its AI custom silicon programs as they begin to ramp meaningfully in Q3.
• Turning to its Carrier and Enterprise end markets, revenue fell 54% yr/yr and 1% sequentially to $151 mln. As expected, these end markets had a rough Q2. However, Marvell feels they have reached the bottom in the first half of this fiscal year. Revenue from both end markets collectively was flat sequentially in Q2. Looking ahead, after multiple quarters of inventory digestion, Marvell is starting to see signs of growth in both end markets. On a combined basis, Marvell expects sequential growth of mid-single digits in Q3 with further improvement in Q4.
• Consumer segment revenue fell 47% yr/yr but jumped 112% sequentially to $88.9 mln following the gaming inventory correction. In Q3, Marvell expects Consumer revenue to grow slightly on a sequential basis.
• And finally, Automotive/Industrial segment revenue fell 31% yr/yr and 2% sequentially to $76.2 mln, roughly in-line with guidance for flat sequential growth. In Q3, Marvell expects growth to resume and is projecting revenue to grow sequentially in the mid-single digits.

Overall, investors like what they see with Marvell's Q2 report and particularly the guidance. Data Center has been a monster segment for Marvell in recent quarters, fueled by AI spending. However, it now sounds like its other segments are finally starting to turn the corner after some recent rough quarters. Based on the stock reaction, investors are reacting to the more positive outlook.