Marvell Technology’s latest results demonstrate that its AI business is gaining momentum at a steady pace.
The company’s latest results have been impressive, and its remarkable earnings growth looks sustainable.
Marvell’s rating makes the stock a no-buy right now.
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Marvell technology (NASDAQ: MRVL ) may not be the first artificial intelligence (AI) semiconductor company that investors may consider for their portfolio. After all, there are bigger companies in this niche that have grown at great rates, driven by the massive deals they’ve done with hyperscalers and AI companies.
Even Marvell’s stock price performance hasn’t been particularly strong in 2025. Shares of the company that designs custom processors and network chips are down 10% this year. That’s a massive underperformance considering PHLX Semiconductor Sector the index has gained an impressive 46% this year.
The underperformance of Marvell stock, however, does not seem justified. Furthermore, the company’s latest results make it clear that it is indeed making a name for itself in the AI chip market. In fact, it won’t be surprising to see this semiconductor stock step on the gas in 2026. Let’s see why that might be.
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Marvell announced its third quarter 2026 results (for the three months ended November 1) on December 2. The company reported a 37% year-over-year increase in revenue to $2.1 billion. Marvell’s non-GAAP (adjusted) earnings rose nearly 77% from the year-ago period to $0.76 per share. Marvell’s stronger profit growth is a result of its improved product mix, as the company pointed out on its last earnings call.
The data center business was its biggest growth driver last quarter, delivering a 38 percent jump in revenue year-over-year and accounting for nearly three-quarters of Marvell’s top line. Importantly, the company has seen strong growth in other segments such as enterprise networking and carrier infrastructure, suggesting that demand for its networking components remains robust.
On the bright side, Marvell sees the data center business sustaining healthy growth on the back of new customer programs that will go into production over the next two years. Management points out that it has “several high-volume custom models in development” that will likely add significantly to its top line in fiscal 2028. It will also begin supplying custom AI processors to a large customer that is transitioning to a next-generation architecture developed by Marvell.
It’s worth noting that the company enjoyed strong earnings momentum in design last quarter. Its custom AI chips have been selected for deployment in over 20 sockets by customers. Not surprisingly, as Marvell pointed out in June that it has more than 50 opportunities to achieve design wins in custom chips at more than 10 customers. The company appears to have made solid progress in this regard in the last quarter.
With Marvell seeing a potential $75 billion lifetime revenue opportunity from its custom pipeline of AI opportunities, investors can expect further acceleration in the company’s data center business over the long term. Additionally, the company strengthened its AI outlook with the decision to acquire Celestial AI for $3.25 billion.
Celestial AI is a photonic fabric interconnect technology provider. Marvell says the technology is ideal for AI data center clusters due to its “high bandwidth, low latency, low power and cost-effective optical fabric.” In fact, photonic fabric is twice as energy efficient as data center copper interconnects and transmits data over longer distances with significantly lower latency.
Marvell estimates that Celestial AI will begin contributing significantly to its top line in the second half of fiscal 2028. Specifically, the company anticipates that Celestial AI will generate annualized revenue of $500 million in the fourth quarter of fiscal 2028, a figure expected to double by the fourth quarter of fiscal 2029.
All of this indicates that Marvell is poised to win big in the AI chip market in the long term, and that’s precisely why the stock’s fortunes could start to rise from 2026.
Even though Marvell has seen remarkable growth of late, it trades at an attractive 35 times earnings. That’s not surprising, as the market hasn’t given its stock due in 2025. However, Marvell is up nearly 8% following its latest quarterly report, which suggests it may be winning over investors.
Additionally, the company looks poised to beat consensus expectations next year. Analysts forecast a 25% increase in the final result in fiscal year 2027, down from the 81% increase projected for the current fiscal year. Of course, last quarter’s divestment of the company’s automotive Ethernet business will contribute to slower earnings growth. However, it’s worth noting that Marvell is still forecasting a substantial 32% year-over-year increase in its bottom line in the current quarter, to $0.79 per share.
Its earnings for fiscal 2026 would be $2.84 per share, based on its forecast. Assuming it achieves a 30% earnings growth rate in the next fiscal year, its bottom line could rise to $3.70 per share. Multiplying this by Nasdaq-100 The average earnings multiple of the index of 34 (using the index as a proxy for tech stocks) points to a share price of $126 after one year, a potential upside of 31% from current levels.
However, this AI stock could deliver higher returns as the new design gains it talked about last quarter could help it deliver a bigger jump in earnings. That’s why it would be a good idea to buy this underperforming stock before it taps gas next year and flies even higher in the long term.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
This semiconductor stock will be artificial intelligence (AI)’s surprise winner in 2026. Here’s how much it could rise next year was originally published by The Motley Fool
