Marvell Technology (MRVL) is headed for a strong 2022. Here’s why

For semiconductor companies, it has been an exciting year though the supply chain issues and raw material shortage played spoilsport to some extent. Marvell Technology Group Ltd. (NASDAQ: MRVL), a leading semiconductor solutions provider focused on data infrastructure, has weathered virus-related challenges aided by the widespread 5G rollout and solid demand for its data center chips.

Read management/analysts’ comments on quarterly reports

Stock Peaks

The Wilmington-based tech firm’s stock made strong gains this month and hit an all-time high after the market responded positively to its third-quarter results. The post-earnings momentum continued for a while but it moderated this week. If experts’ bullish outlook is any indication, the next calendar year would be an exciting period for MRVL as the value is estimated to grow by a fifth and cross the $100-mark. It is a safe investment option with a promising future.

The ever-increasing need for faster networks and the rapid growth in data storage should continue to drive growth for the company. Taking a cue from the positive market environment, the management recently issued strong guidance for the next fiscal year. Going by the current trend, there is ample room for market share expansion going forward, thanks to Marvell’s encouraging design wins and customer growth.

As part of its efforts to better align the business with the changing market environment, the company recently acquired Innovium, a leading provider of switching silicon solutions for Cloud and Edge data centers.

Record Revenues

The October quarter was probably the most rewarding quarter for the company, with revenues growing sharply to a record high of $1.21 billion and beating the estimates. Earnings have topped expectations for three consecutive quarters now, with the latest number rising to $0.43 per share from $0.25 per share last year.

The growth was driven mainly by the fast-paced 5G adoption and strength of the company’s core data center business, which accounted for around 41% of total revenues. Inphi Corp., a provider of analog and mixed-signal semiconductor solutions for the communications market that joined the Marvell fold early this year, and recently acquired Innovium also contributed to the top-line.

From Marvell’s Q3 2022 earnings conference call:

“We expect data center revenue to more than double from a year ago, and we project sequential growth in the double-digits on a percentage basis in the fourth quarter. We are pleased with the strength we are seeing from the cloud end market, which we expect will remain a strong driver of sustained growth for Marvell. Looking out further in time, we are also excited by the immense potential for another phase of growth as large-scale virtual environments, such as Facebook is doing with their metaverse, start to gain traction,”  

Marvell Technology’s stock traded sharply lower early Friday but stayed well above its 52-week average. It has gained 12% in the past 30 days alone.