Marvell Technology saw its shares plunge 11.3% in premarket trading as its outlook for data centre demand missed the high expectations of investors. The slump came despite the company’s strong reputation for custom chips that handle AI workloads for tech behemoths like Microsoft and Amazon. While Nvidia recently reported solid earnings amid signs of slowing data centre growth, even competitors such as Broadcom have yet to announce their latest figures.
Marvell’s reliance on bespoke application-specific integrated circuits (ASICs) means its performance is closely tied to customer demand swings. CEO Matthew Murphy explained on a post‐earnings call that the company expects its data centre revenue to remain flat in the third quarter—a phenomenon he described as “lumpy” when large cloud providers expand their networks. Analysts at Morgan Stanley were notably surprised by the consistent decline in Marvell’s ASIC revenue, especially as delays in Microsoft’s roll-out of in‑house AI chips push that timeline to 2028 or beyond.
In parallel, as Amazon Web Services grapples with losing market share to competitors like Microsoft Azure and Google Cloud, Marvell faces additional pressures. Its smaller scale and customers’ move toward sourcing from multiple vendors might squeeze profit margins further. Although the company met second‑quarter expectations with $2.01 billion in revenue, its guidance for the third quarter—between $1.96 and $2.16 billion—fell short of the $2.11 billion forecast, leaving investors cautious amid a lower price-to-earnings ratio compared to peers like Broadcom.
