Can MRVL's Custom AI Silicon Keep Driving Data Center Wins?

Marvell Technology’s MRVL custom AI silicon chips are experiencing massive traction among hyperscalers, which is evident in the high-growth rate of Data Center end-market revenues. The custom AI silicon chips mainly account for Marvell’s custom AI XPUs and electro-optics solutions.

Marvell Technology’s data center segment has taken the lead among all its segments with 76% year-over-year revenue growth in the first quarter of fiscal 2026, driven by robust demand in custom AI accelerators, including AI XPUs and custom high bandwidth memory chips

Looking ahead, Marvell Technology plans to rapidly expand its customer base by winning more hyperscalers that want to differentiate, cut costs and seek more control over their AI infrastructure. To achieve this milestone, MRVL has collaborated with NVIDIA and leveraged the latter's NVLink Fusion platform to build comprehensive rack-scale AI solutions.

To match the demand, Marvell is heavily investing in its custom silicon programs to rapidly scale production. Marvell 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.

Marvell Technology also develops custom application-specific integrated circuit designs for AI, cloud data center and OEM customers using its advanced 5nm and 3nm processes like 112G XSR serializer/de-serializer (SerDes), Long Reach SerDes, PCIe Gen 6 SerDes. These capabilities enable MRVL to stay ahead of its competitors in the custom AI silicon space.

How Competitors Fare Against MRVL

Broadcom AVGO is one of the leading suppliers of custom silicon solutions for data center, service provider, and enterprise networking customers. Broadcom’s advanced 3.5D XDSiP packaging platform is specifically designed to enhance the performance and efficiency of custom AI XPUs. Broadcom’s Semiconductor segment, which accounts for its custom silicon solutions, grew 11% year over year in the first quarter of fiscal 2025.

Advanced Micro Devices AMD is another 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.

While Broadcom and Advanced Micro Devices are formidable players in the custom silicon space for AI acceleration, Marvell’s move toward the 2.5D packaging platform, optimized for AI XPUs, and its deep partnership with NVIDIA give it an edge over them. This will ensure that its Custom AI Silicon chips will keep driving its data center wins amid high demand.

MRVL's Price Performance, Valuation and Estimates

Shares of Marvell have lost 40% year to date against the Electronics - Semiconductors industry’s growth of 5.6%.

Marvell Technology YTD Performance Chart

From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 6.58X, lower than the industry’s average of 8.25X.

Marvell Technology Forward 12 Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Marvell’s fiscal 2026 and 2027 earnings implies year-over-year growth of 77% and 28%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.

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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