Wall Street raises the "magnifying glass": Marvell Tech's earnings guidance falls short of the highest expectations, causing a post-market stock price collapse
Marvell Tech's fourth-quarter performance exceeded expectations, but its revenue guidance fell below the market's highest expectations, causing the stock price to drop nearly 15% in after-hours trading. Although first-quarter sales are expected to be $1.88 billion, in line with analyst expectations, some forecasts reach as high as $2 billion. Analysts pointed out that the market's attitude towards AI companies has become stricter, and investor confidence in Marvell Tech has weakened, with the stock price down 18% year-to-date
According to Zhitong Finance APP, Marvell Technology (MRVL.US) announced better-than-expected fourth-quarter results on Wednesday. However, the revenue guidance provided by the company fell below the market's highest expectations, indicating that Wall Street's attitude towards artificial intelligence (AI) companies continues to be stricter, which led to a nearly 15% drop in the company's stock price after hours.
The chip manufacturer stated in a release on Wednesday that it expects first-quarter sales for the fiscal year ending in April to be approximately $1.88 billion. While this figure meets the average expectations of analysts, some forecasts reached as high as $2 billion.
Marvell Technology also expects, excluding certain items, that earnings per share for the first quarter will be between $0.56 and $0.66. Analysts had previously estimated $0.60.
In the fourth quarter, earnings per share calculated on this basis rose to $0.60, exceeding analysts' estimate of $0.59. Revenue grew by 27% to $1.82 billion, surpassing the expected $1.8 billion.
After the earnings report was released, Marvell Technology's stock price fell nearly 15% in after-hours trading. Year-to-date, the stock has declined by 18%.
Mizuho analyst Jordan Klein wrote in a research report prior to the earnings release: "Funds are looking for any reason to reduce exposure and holdings in AI (semiconductors), hardware, optics, and interconnect stocks." He specifically mentioned that many investors are still shorting Marvell Technology's stock, believing that "any performance exceeding expectations and upward guidance is insufficient to boost the stock price." Concerns about customer concentration and competition from Asia are also intensifying.
Marvell Technology has been viewed as one of the main beneficiaries of AI computing infrastructure development, which has raised market expectations for this chip manufacturer. Three months ago, the company's results exceeded expectations, driving its stock price to an all-time high.
The company, headquartered in Santa Clara, California, provides chip design services to help major tech clients develop their own data center semiconductors. These so-called hyperscale enterprises have been ramping up internal processor production to optimize computer networks for their AI software and services. According to compiled data, Amazon (AMZN.US) is one of Marvell Technology's largest customers.
This year, stocks of AI-related companies have generally declined as investors worry that customers may cut spending. Chinese startup DeepSeek released an AI model that reportedly has relatively low production costs, exacerbating market concerns that the industry may not require as much expensive equipment.
Stifel Financial Corp. analyst Tore Svanberg stated in a report: "In recent weeks, investors have been very 'nervous' about AI-related stocks. And 'Marvell Technology's report' may not help alleviate this nervousness."
Breaking it down, the company's Q4 data center business contributed the most, with revenue increasing by 78% year-over-year to $1.37 billion, exceeding the expected $1.36 billion. Consumer business revenue fell by 38% year-over-year to $8.87 million, while revenue from carrier infrastructure business also declined by 38% year-over-year to $105.8 million Sales for the enterprise networking business and automotive and industrial business in this quarter were $171.4 million and $85.7 million, respectively.
"Our custom AI chip project has entered the mass production stage, and interconnect products continue to show strong growth," said CEO Matt Murphy in the earnings report. "The company has won multiple new design orders, including several custom chip projects that will drive future growth."
Another chip manufacturer related to the AI boom, Broadcom (AVGO.US), also saw a decline after Marvell Tech announced its earnings. Its stock price fell nearly 3% in after-hours trading. Broadcom is scheduled to release its quarterly earnings report on Thursday local time