Marvell Shares Jump 7%, Boosting Appeal of Call Options

$Marvell Technology(MRVL)$   shares jumped more than 7%, bolstering the appeal of its call options, after the semiconductor unveiled its latest chip for next-generation artificial intelligence (AI) infrastructure silicon and raised its estimate on the total addressable market for its AI custom chip. 

The company "presented a compelling and sustainable growth strategy for its AI datacenter networking/ASIC business," JPMorgan analysts Harlan Sur and Peter Keng wrote in a note to clients Wednesday. 

Marvell expects its data center total addressable market to reach $94 billion in 2028, higher than the $75 billion it outlined in a similar event last year, according to a transcript of its investor webinar Tuesday.  

Custom compute total addressable market could reach $55 billion, including about $40 billion for XPU, which has a compounded annual growth rate of 47%; and $15 billion for XPU attach, which is growing at 90%, Chairman and CEO Matt Murphy said during the webinar.

More than 215,750 call and put options changed hands as of 11:12 a.m. in New York, as the stock climbed as much as 10.7% to its highest intraday level in more than three months. The volume so far is almost double the 20-day average of 116,283 contracts, according to data compiled by Bloomberg. The total so far put Marvell on track to be the fourth most active stock option, behind $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$, and $Advanced Micro Devices (AMD.US)$. 

"If you look underneath that, the two fastest-growing markets last year have grown even more," Murphy said. "Compute is almost 30% larger than what we projected last year, and interconnect is up about 37%. So both of these are right in Marvell's wheelhouse, and they're key focus areas for us."

Shares advanced as much as 10.7% to $77.47, the highest intraday level since early March. Call options that give the holder the right to buy the stock at $75 by Friday attracted the heaviest volume as the rally bolstered the odds that the contract will stay in the money before they expire in two days. Thursday is a market holiday in the U.S. and trading resumes Friday.  

The stock last traded at $75.12, up 7.4%. That makes Marvell the second biggest gainer on the $Nasdaq Composite Index (.IXIC.US)$. 

Marvell's earnings could reach $8 to $9 by 2028, should it take a 20% share of the data center's total addressable market, "implying significant upside in the stock from current levels," JPMorgan analysts said. That's a big jump for a company that reported earnings per share of 23 cents for fiscal year 2025. 

The JPMorgan analysts, who have an overweight rating on Marvell, has a price target of $130 for the stock for December 2025.  

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