Marvell Technology Inc. (NASDAQ: MRVL) is one of Jim Cramer’s favorite companies, particularly due to the firm’s CEO. The CNBC TV host often recalls how Murphy made a large insider purchase to demonstrate faith in the firm, following which the shares appreciated significantly. Marvell Technology Inc. (NASDAQ: MRVL) is a key player in the AI industry due to its ability to design custom AI chips called ASICs. With the firm’s shares down 10% since its earnings on August 27th, here is what Cramer said about the company in his morning appearance on the 28th:
“And then last night, I’m reading Marvell, okay so Marvell he did not put together. Matt did not say, that the money’s going to flow very quickly. But that’s not what’s important. What’s important he made, last [inaudible] I had an analyst meeting, it was really, like, it was like, are you kidding me, he can really do that number, it turned out it was like a fraction of what he can do. October 6 is going to be analyst meeting, so you can sell that stock all you want but you do not want to be betting against that stock going into the October 6 meeting. Cause I think that Murphy’s going to tell you a really compelling story.
“I don’t know, Marvell is a very expensive stock unless it works!”
As part of its second quarter earnings, Marvell Technology Inc. (NASDAQ: MRVL) reported $2.7 billion in revenue and $0.94 in earnings to beat analyst estimates for both metrics. However, the firm’s third quarter guidance hinted at a growth slowdown. The fact that it is able to design AI chips means that Marvell Technology Inc. (NASDAQ: MRVL)’s narrative is also tied to the AI buildout. On this front, the second quarter earnings both drove the bullish narrative and provided the bears something to worry about.
In Q2, Marvell Technology Inc. (NASDAQ: MRVL)’s CEO outlined that the firm expects a “significant acceleration in our Custom business beginning in the second half of fiscal 2027.” His remarks came on top of a 37% revenue growth and 46% growth in the data center business lends credence to the viewpoint that the firm’s growth is accelerating. Additionally, management also outlined that Marvell Technology Inc. (NASDAQ: MRVL)’s data center business could double by FY28.
However, the data center optimism comes at a cost. 79% of Marvell Technology Inc. (NASDAQ: MRVL)’s second quarter revenue is from data center, and with the firm’s customers being hyperscalers, their large orders come with the risk of major revenue hits in case of a change of heart. Not to mention, the large orders also leave investors wanting immediate revenue gains instead of steady gains over the long term.
Hedge fund interest in Marvell Technology Inc. (NASDAQ: MRVL) appeared to grow in Q2. In Q1, 79 hedge funds part of Insider Monkey’s database had held a stake in the firm while the figure grew to 96 funds in the second quarter. Despite the 10% dip, the forward P/E is at 59x, which is significantly lower than peer firm Broadcom’s 19.8.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
Disclosure: None.
