Chipmaker Marvell Technology posted better-than-expected sales in its fiscal second quarter thanks to strong demand for its custom chips for artificial intelligence applications. MRVL stock rose Friday on the news.
Late Thursday, Marvell reported adjusted earnings of 30 cents a share on sales of $1.27 billion in its fiscal Q2 ended Aug. 3. Analysts polled by FactSet had expected earnings of 30 cents a share on sales of $1.25 billion.
But on a year-over-year basis, Marvell's earnings fell 9% while sales declined 5%. Marvell's Q2 report marked its second straight quarter of declining sales and earnings.
For the current quarter, the Santa Clara, Calif.-based company expects adjusted earnings of 40 cents a share on sales of $1.45 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of 38 cents a share on sales of $1.41 billion in the fiscal third quarter. In the same quarter last year, Marvell earned an adjusted 41 cents a share on sales of $1.42 billion.
On the stock market today, MRVL stock jumped 9.2% to close at 76.24.
MRVL Stock: AI Chips A Bright Spot
"Marvell's second-quarter revenue grew 10% sequentially, above the midpoint of guidance, driven by strong demand from AI," Chief Executive Matt Murphy said in a news release. "We saw strong growth from our electro-optics products and our custom AI programs began to ramp."
He added, "Next quarter, we expect our combined enterprise networking and carrier end markets to return to growth, while our data-center end market growth accelerates."
Marvell makes custom AI chips for Alphabet's Google, Amazon and Microsoft.
Marvell Stock Gets Flurry Of Price-Target Hikes
At least six Wall Street firms raised their price targets on MRVL stock after Marvell's Q2 report.
Marvell is "firing on all cylinders," Barclays analyst Tom O'Malley said in a client note. He reiterated his overweight rating on MRVL stock and upped his price target to 85 from 80.
"Management notably pointed to AI revenue that will significantly exceed the prior target given earlier this year ($1.5 billion total for fiscal 2025), and expects multi-quarter sequential growth trajectories for the enterprise and carrier businesses that had been undergoing steep inventory corrections dating back to last year," O'Malley said.
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