Is MRVL's AI Strategy the Key to Data Center Revenue Growth?

Marvell Technology’s MRVL Data Center segmental revenues have been growing at a rapid pace for the past six quarters. In the first quarter of fiscal 2026, MRVL’s Data Center revenues increased 76.5% year over year to $1.44 billion. The upside can be attributed to high traction in custom AI XPUs, modular packaging tech and Optics offerings.

Marvell Technology’s custom AI silicon chips mainly account for MRVL’s custom AI XPUs and electro-optics are experiencing massive traction among hyperscalers, AI data centers and high performance computing. To secure its position in this market, Marvell Technology is heavily investing in its custom silicon programs to rapidly scale production.

Marvell Technology has also introduced a 2.5D advanced packaging platform built in-house that will enable it to cater to custom XPUs that ensure reduced power consumption while lowering overall product cost for customers during AI operations.

MRVL also uses advanced CMOS technologies at 5nm and 3nm nodes and is now shifting toward 2nm and below. MRVL is also leveraging Chip-on-Wafer-on-Substrate and Integrated Fan-Out technologies to develop designs for high-performance Application Specific Integrated Circuits.

MRVL is also making strides in its optics business as the industry transitions to 1.6 Terabit optical interconnects. Its latest introduction, the co-packaged optics solutions feature higher interconnect densities, longer reach and scalable networking architecture. Marvell Technology’s Silicon Photonics Light Engines support speeds up to 6.4T by combining several parts into compact modules, making them ideal for both plug-in and co-packaged uses.

How Competitors Fare Against MRVL

Marvell Technology faces stiff competition in both the custom AI silicon and optics space from players like Broadcom AVGO and Coherent Corp. COHR.

Broadcom is one of the biggest suppliers of custom silicon solutions for data center, service provider, and enterprise networking customers. AVGO’s advanced 3.5D XDSiP packaging platform is specifically designed to enhance the performance and efficiency of custom AI XPUs. Broadcom’s Semiconductor solutions segment, which accounts for its custom silicon solutions, grew 16.7% year over year in the first quarter of fiscal 2025.

In the optics space, Broadcom directly competes with Marvell Technology across high-speed PAM4, Ethernet PHYs, and optics used in hyperscale AI networks. Another crucial player, Coherent, offers optical components, transceivers, coherent optics and optical engines used in data centers, overlapping with Marvell Technology's light engine offerings.

MRVL's Price Performance, Valuation and Estimates

Shares of Marvell Technology have lost 28.2% year to date against the Electronics - Semiconductors industry’s growth of 22.4%.

MRVL YTD Performance Chart

From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 7.59X, lower than the industry’s average of 9.13X.

MRVL Forward 12 Month YTD Valuation Chart

The Zacks Consensus Estimate for Marvell Technology’s fiscal 2026 and 2027 earnings implies year-over-year growth of 77% and 27%, respectively. The estimates for fiscal 2026 have remained unchanged over the past 60 days, while fiscal 2027 earnings estimates have been revised upward in the past 30 days.

Marvell Technology currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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