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Marvell is well-positioned to capture a significant share of global data center spending.
It has 18 active design projects and a robust pipeline of 50 new design opportunities.
The company is profitable and is committed to returning capital to shareholders.
Technology companies have become key enablers of the global artificial intelligence (AI) revolution and are playing a crucial role in its buildout. A prominent yet less flashy name in this list is Marvell Technology (NASDAQ: MRVL). With its share price at around $88 today, even a modest $200 investment can secure a small stake in this powerful AI infrastructure player.
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The company designs custom silicon chips (XPUs) such as optimized CPUs and AI accelerators, as well as XPU-attached chips, such as memory controllers and high-speed networking interconnects, to help data move fast and with low latency within hyperscaler clusters.
With the global spending on data centers expected to surpass $1 trillion by 2028, Marvell expects its total addressable market (TAM) to be around $94 billion by 2028, up 26% from its prior estimate. Of this, TAM for accelerated custom compute is expected to be $55.4 billion, while that for interconnects is estimated at $19 billion by 2028.
Marvell is actively engaged in 18 custom projects to design multiple generations of XPU and XPU-attached chips. Of these, three custom XPUs and nine custom XPU-attached chips are being designed for four major hyperscalers, while two custom XPUs and four custom XPU-attached chips are being designed for two new hyperscalers.
The company also has 50 new design wins in the pipeline, which together can generate $75 billion in lifetime revenue. With a diversified portfolio spanning networking, memory, and compute, and a deep pipeline, the company is relatively resilient to macroeconomic uncertainties.
Marvell's revenue surged 58% year over year to $2.01 billion, while adjusted earnings per share soared 123% to $0.67 in the second quarter of fiscal 2026. The company is also committed to returning capital to shareholders, as evidenced by the new $5 billion share repurchase program announced in September. The company returned $52 million in dividends and $200 million through share repurchases in the second quarter.
Considering all of these aspects, Marvell is one of the smartest technology picks now.
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Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
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