MRVL Surges 31% in a Month: Should You Hold or Fold the Stock?

Marvell Technology MRVL has climbed 30.6% in a month, outperforming the Zacks Electronics - Semiconductors industry’s return of 4.4%. This sharp rise in the share price of this semiconductor leader raises the question: Should investors hold the stock or book profits?

Marvell Technology One Month Price Performance Chart

MRVL Banks on AI and Optics Growth

Marvell Technology is experiencing massive demand growth for its custom AI silicon chips and electro-optics solutions among AI data centers, hyperscalers and in networking applications. The growth is evident in the second quarter of fiscal 2026 financial results, where its data center revenues grew 69% year over year and its carrier and enterprise businesses experienced a recovery.

MRVL has achieved a number of milestones in the second quarter of fiscal 2026. In the second quarter, its next-generation 200G per lane 1.6T PAM4 DSPs saw volume shipments for the first time. The company also announced a 2nm custom SRAM that will see its application in next-generation AI infrastructure.

MRVL deepened its collaboration with Microsoft Azure in the HSM space and launched packaged-integrated voltage regulator power solutions for advanced infrastructure. For future growth, Marvell Technology plans to ramp customer growth by securing more hyperscalers seeking differentiation, cost reduction, and greater control over their AI infrastructure.

MRVL is Riding on Traction in the Data Center Segment

Marvell Technology’s data center segment has experienced rapid growth in the past six quarters. In the second quarter of fiscal 2026, Marvell Technology’s data center segment grew 69.2% year over year to $1.49 billion.

Marvell Technology’s data center growth has been driven by traction in custom XPUs, electro-optics interconnect products, and next-generation switch divisions due to their increasing application in AI computation and networking across both hyperscale and enterprise spaces.

In the second quarter, MRVL’s next-generation 200G per lane 1.6T PAM4 DSPs saw volume shipments. Marvell Technology also announced a 2nm custom SRAM that will be applied in next-generation AI infrastructure.

Marvell Technology deepened its collaboration with Microsoft Azure in the HSM space and launched packaged-integrated voltage regulator power solutions for advanced infrastructure. Additionally, Marvell Technology’s ramping up of 51.2 Tbps switches played a formidable role. All the aforementioned factors propelled MRVL’s strong data center growth.

With AI adoption accelerating across industries, MRVL’s stronghold in the data center market makes it a critical beneficiary of the trend. Marvell Technology’s crucial contribution to the development of AI chips positions it well for sustained revenue growth.

MRVL Faces Stiff Competition From Industry Leaders

Competitive pressure from semiconductor giants like Broadcom AVGO and Advanced Micro Devices AMD in the AI accelerator market and Micron Technology MU in the HBM space has added to Marvell Technology’s woes.

Advanced Micro Devices is a strong player in the custom silicon solutions and AI accelerator space with its semi-custom SoC offerings and Instinct Accelerators that power numerous data centers. Advanced Micro Devices’ reconfigurable Alveo Adaptable Accelerator Cards are used to speed up compute-intensive applications in data centers.

Broadcom’s advanced 3.5D XDSiP packaging platform is specifically designed to enhance the performance and efficiency of custom AI XPUs for AI accelerators. Micron Technology has made significant strides in AI-optimized memory solutions, with MU’s HBM3E products gaining attention for their superior power efficiency and bandwidth.

Constant competition from these industry giants has led it to invest heavily in sales and marketing and research and development to stay competitive. MRVL’s non-GAAP gross margin of 59.4% contracted 250 basis points (bps) year over year and 40 bps sequentially in the second quarter of fiscal 2026.

While the Zacks Consensus Estimate for fiscal 2026 earnings has remained unchanged for the past 60 days, the estimate for 2027 has been revised downward in the past 30 days.

Marvell Technology Trades at a Premium

From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 8.25X, higher than the industry’s average of 3.77X.

MRVL Forward 12 Months (P/S) Valuation Chart

Conclusion: Hold MRVL Stock for Now

MRVL’s robust Data Center revenues and strengthening position in the AI and optics market strengthen its investment thesis. However, lofty valuation and competitive challenges are a concern for the company right now.

Marvell Technology currently carries a Zacks Rank #3 (Hold). 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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