SUMMARY
- Marvell Technology's shares soar by 32% following better-than-expected quarterly earnings, with the share price reaching a level unseen since April 2022.
- CEO Matthew Murphy underscores the growing importance of AI in their portfolio, prompting a strategic reassessment of its potential within the company.
- Analysts from Citi highlight the company's opportunity to significantly increase AI-driven revenue, reinforcing their buy rating, and raising the price target.
Marvell Technology's shares experienced a substantial surge in value, continuing a dramatic rally that kicked off after-hours on Thursday. The semiconductor company's stock value jumped by an impressive 32% following the release of stellar quarterly earnings results, exceeding expectations on multiple fronts.
The Silicon Valley-based firm released its first-quarter earnings, boasting adjusted earnings of 31 cents per share, noticeably outperforming the Refinitiv consensus prediction of 29 cents per share. Marvell's revenue figures also surpassed estimates, hitting the $1.32 billion mark, comfortably beating the forecasted $1.3 billion. With this performance, Marvell's share price has ascended to levels unseen since April of the preceding year.
During an analyst conference call, the company's CEO, Matthew Murphy, shed light on Marvell's strategic reassessment of its Artificial Intelligence (AI) business segment. He portrayed a shift in perspective, with AI now perceived not merely as one of many applications within the cloud domain but rather as an area of immense business opportunity, the significance of which has skyrocketed.
In light of these revelations, Citi analysts sent a bullish note to investors, emphasizing Marvell's substantial opportunity to ramp up its AI-driven revenue. As a vote of confidence, Citi not only retained its buy rating on Marvell but also raised its price target from $58 to $61.
Backing Citi's optimism was Marvell's financial forecast, particularly regarding its AI revenue stream. During fiscal year 2023, Marvell anticipated AI-driven revenue to hit around $200 million, marking a significant rise from the previous fiscal year. The company further projected that its AI sales would climb to approximately $400 million in fiscal year 2024 and subsequently double by fiscal year 2025. Meanwhile, Nvidia's blockbuster earnings report from Wednesday seemed to provide a broad boost to several semiconductor firms.
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