Semiconductor giant Marvell Technology (NASDAQ:MRVL) delivered better-than-expected revenue in Q4, driven by benefits from artificial intelligence (AI)-led demand. However, the company’s lower-than-expected Q1 guidance didn’t sit well with the investors. As a result, MRVL stock dropped nearly 8% in Thursday’s after-hours trading.
Nevertheless, Marvell stock has gained over 41% year-to-date and is up about 98.1% in one year.
MRVL Top Line Exceeds Street’s Q4 Forecast
The company delivered net revenue of $1.43 billion in Q4, up 1% year-on-year. Its top line exceeded analysts’ estimate of $1.42. The company’s sales benefitted from record revenue in the data center end market, which increased 54% year-over-year. MRVL noted that AI has been a key growth driver. This growth was partially offset by weakness in Marvell’s carrier and enterprise end markets.
In terms of bottom-line numbers, MRVL’s adjusted earnings remained flat at $0.46 per share in Q4. Moreover, it was in line with the Street’s forecast.
Outlook Falls Short of Expectations
Marvell Technology will likely benefit from AI and standard cloud data center revenue in Q1. However, weakness in the carrier infrastructure and enterprise networking end markets could remain a drag. The company expects revenue in these markets to decline in Q1.
For the first quarter, MRVL expects revenue to be $1.15 billion (+/-5%), which compares unfavorably with analysts’ estimate of $1.38 billion. Further, the company forecasts adjusted EPS in the range of $0.18 to $0.28, compared to analysts’ estimate of $0.41.
Is Marvell Technology a Buy, Sell, or Hold?
Wall Street analysts are upbeat about the company’s data center end market, which is benefitting from AI-led demand. It has received 19 Buy and one Hold recommendations for a Strong Buy consensus rating. However, due to the rally in its share price, analysts’ average price target of $82.40 implies 3.16% downside potential from current levels.
