Marvell Technology Stock Tumbles Amid Concerns Over AI Infrastructure Spending
By Arsheeya Bajwa
(Reuters) – Marvell Technology experienced a significant 16% drop in its stock price on Thursday, causing a ripple effect across the chipmaker industry. The decline came after the company provided an in-line revenue forecast that raised concerns among investors about the outlook for spending on AI infrastructure. This downturn comes at a time when the long-standing rally in the sector is showing signs of cooling off.
Investors had been closely monitoring Marvell’s earnings, as the company is a crucial supplier of custom AI chips to major tech companies. The demand for these chips has been a driving force behind the market gains in the U.S. since the emergence of ChatGPT and the subsequent generative AI boom in late 2022.
Despite Marvell’s current-quarter revenue forecast being slightly above estimates by $10 million, concerns persist regarding the necessity of significant investments in AI infrastructure, particularly in light of cost-effective advancements made by Chinese startup DeepSeek.
The focus has now shifted to Broadcom, another key player in the custom AI chip space, whose results are expected later on Thursday. Marvell holds the second position in this market, with Broadcom being the most important supplier.
Following Marvell’s decline, shares of Broadcom fell by 4%, while Nvidia saw a 2% drop in its stock price.
The chip sector has also been impacted by the tariffs imposed by President Donald Trump on countries like China. The Philadelphia Semiconductor Index has experienced a 5% decline in 2025, following an impressive 20% gain the previous year.
Analysts from Melius Research commented on the current sentiment towards AI semiconductor stocks, noting that the negative reaction to Marvell’s performance was driven by a minor revenue beat and raise.
Marvell, which briefly surpassed Intel in market value last year, stands to lose $12 billion if premarket share losses are sustained. The stock saw a remarkable 83% increase in 2024 but has dipped by 18% so far in 2025.
Despite exceeding its fiscal 2025 target of $1.5 billion in AI revenue, Marvell anticipates surpassing its projections of $2.5 billion in AI sales for fiscal 2026, as mentioned by CEO Matt Murphy during a post-earnings call.
J.P. Morgan analysts attribute the subdued outlook to a slowdown in on-premise data center products, specifically citing weaker demand for ethernet cables and fiber channels used for data transfer across servers.
As major tech companies shift their focus towards AI chips, the demand for networking equipment, which constitutes Marvell’s core business, has weakened.
Custom chips typically yield lower margins compared to off-the-shelf processors, with Marvell expecting an adjusted gross margin of around 60% for the April quarter, down by more than two percentage points from the previous year.
Following the earnings report, at least nine brokerages have lowered their price targets for Marvell, with the median target at $130 according to LSEG data, representing a potential 44% upside from the stock’s last closing price.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)
