Buy Marvell Technology as a Potential Dark Horse of AI Chips in 2026

Marvell Technology Inc. MRVL — a leading fabless designer, developer and marketer of analog, mixed-signal and digital signal processing integrated circuits for artificial intelligence AI) infrastructure — reported strong third-quarter fiscal 2026 earnings results. Quarterly EPS of $0.76 per share,, beat the Zacks Consensus Estimate by 1.3%. Total revenues of $2.08 billion surpassed the Zacks Consensus Estimate by 0.61%.

MRVL is a promising player in the solid-state drive controllers’ market. The storage market is seeing a steady increase in demand, given the fast-growing data volume, especially the exponential growth in unstructured data. Completion of inventory digestions is likely to aid growth for MRVL across the enterprise networking and carrier infrastructure end markets.

Solid Business Growth

Third-quarter revenues grew 36.8% year over year, mainly driven by strong growth in the data center and continued recovery in enterprise networking and carrier infrastructure end markets. 

Data center revenues of $1.52 billion increased 37.8% year over year and 1.8% sequentially, driven by strong traction in custom XPU silicon, electro-optic interconnect products and next-generation switch offerings. The segment contributed 73.2% of total revenues, reaffirming its position as MRVL’s largest end market.

Revenues from enterprise networking rose 57% year over year and 23% sequentially to $237.2 million, accounting for 11.4% of total revenues. The robust growth primarily reflected the continued normalization of inventory levels.

Carrier infrastructure revenues increased 98% year over year and 29% sequentially to $167.8 million, representing 8.1% of total revenues, driven by demand recovery across carrier customers.

Custom AI silicon and electro-optics products have positioned MRVL as a critical player in high-performance computing. The company’s partnerships with leading hyperscalers ensure sustained growth, with management confident that revenues from its custom XPU (accelerated computing) solutions will continue expanding in fiscal 2027 and beyond.

Expansion Through Acquisition

MRVL announced the acquisition (expected to close in the first quarter of fiscal 2027) of Celestial AI, which specializes in the Photonic Fabric technology platform. This platform is purpose-built for scale-up optical interconnect.

MRVL highlighted that Celestial AI is “deeply engaged” with several hyperscalers and ecosystem partners. Celestial AI has already won a major contract with one of the biggest hyperscalers. This hyperscaler intends to use the photonic fabric chiplets in its next-generation scale-up architecture. 

Hyperscalers are also central to the company’s other product lines. MRVL is pushing boundaries with 400G per lane PAM technology, enabling 3.2T optical interconnects and future-proofing hyperscaler infrastructure.

Acquisition of Celestial AI will put Marvell on a firm footing in the next-generation energy-efficient AI infrastructure space to compete intensely with bigwigs like NVIDIA Corp. NVDA and Broadcom Inc. AVGO. 

Strong Guidance 

MRVL provided strong revenue guidance for the fourth quarter. It expects revenues to be $2.20 billion (+/- 5%). The Zacks Consensus Estimate for revenues is pegged at $2.15 billion, implying 18.52% year-over-year improvement. Marvell expects data center revenue growth to be higher next year, reflecting accelerating AI demand.

The company projects non-GAAP earnings per share for the fiscal fourth quarter to be $0.79 (+/- $0.05). The Zacks Consensus Estimate for revenues is pegged at $0.78, implying 30% year-over-year improvement.

Attractive Estimate Revisions

MRVL has an expected revenue and earnings growth rate of 15.3% and 18.9%, respectively, for next year (ending January 2027). The Zacks Consensus Estimate for next year’s earnings has improved 0.6% in the last 30 days. 

Marvell currently carries a marvelous long-term (3-5 years) EPS growth rate of 38.2% compared with the broad-market index — the S&P 500 — long-term growth rate of 16.1%. 

Excellent Valuation

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.

Year to date, the stock price of Marvell Technology has been going through a rough patch. The stock price has fallen more than 11% in 2025. The stock is currently trading at a 21.4% discount to its 52-week high. MRVL currently carries a forward P/E of 32.8% compared with 34% of its peers’ average. Return on equity is 15.2% compared with 2.9% of the industry. 

Strong growth in MRVL’s data center, enterprise networking and carrier infrastructure revenues coupled with the proposed acquisition of Celestial AI could be a game changer for the company. Consequently, the stock could be a potential dark horse in Wall Street’s AI infrastructure race.

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

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