The artificial-intelligence trade has been dominated by growing interest in custom chips that compete with Nvidia’s offerings, and Marvell Technology’s earnings report could signal that interest isn’t slowing down.
J.P. Morgan analyst Harlan Sur said he expects to see “continued solid momentum” in Marvell’s lead custom chip program with Amazon.com, when Marvell shares its fourth-quarter earnings results late Thursday. The company works with Amazon on its Trainium chips, which are known as application-specific integrated circuits, or ASICs.
Investors have been concerned that custom chips pose a threat to Nvidia’s dominance in the market for AI chips.
Sur also anticipates strong demand for Marvell’s optical digital signal processors, which convert electrical signals into light for high-bandwidth, low-latency data transmission in AI data centers, and for its storage products.
Marvell CEO Matt Murphy had said in January that its short-term bookings were “on fire,” and that its visibility into its backlog and revenue were expanding, according to a FactSet transcript of his meeting with Sur.
Subsequently, all four major hyperscalers — Amazon, Microsoft, Alphabet and Meta— have raised capital-expenditures expectations for the year to a collective $645 billion.
“This strong spending environment is further validated by strong beats and guidance raises across the AI semiconductor supply chain,” Sur said, pointing to Nvidia and connectivity provider Astera Labs. He expects Marvell “to benefit from similar trends.”
Sur sees “a solid setup” for Marvell this year, driven by demand from the AI data-center buildout and its custom chip programs with Amazon and Microsoft. Amazon’s Trainium 2 chips are currently ramping, he said, while its next-generation Trainium 3 chips are slated to start ramping in the middle of the year. And Microsoft’s Maia accelerators are also on track to ramp in the second half of this year into next year, Sur added.
Meanwhile, Marvell’s scale-up networking business should get a boost starting in 2028 from its acquisitions of Celestial AI and XConn that were completed earlier this month, Sur said, “reinforcing its strong networking portfolio.”
Still, Susquehanna analyst Christopher Rolland said investors’ concerns about the sustainability of Marvell’s custom chips business are ongoing, especially as it could lose some share of its business with Amazon to Taiwanese custom-chip designer Alchip.
He also pointed to “increased noise around hyperscalers” leaning toward customer-owned tooling, which is when the customer has control over the manufacturing process and can choose different suppliers for different parts.
While he expects momentum to continue for custom chips due to the strong demand environment from AI, Rolland said in a late February note that the “longer-term sustainability” of Marvell’s custom chips business is still “debatable.”
Marvell is expected to report fiscal fourth-quarter adjusted earnings of 79 cents a share, up from 60 cents a share in the same period a year ago, on revenue growth of 21.4% to $2.2 billion, according to analysts tracked by FactSet.
The data-center segment is expected to make up $1.6 billion of that, or nearly two-thirds of total revenue.
For the first quarter, analysts are looking for total revenue of $2.3 billion and adjusted earnings of 74 cents per share, according to FactSet.
