Cloudy Future for Marvell as AI Chip Demand Wanes

Marvell Technology's stock plummeted by nearly 18% on Friday following a disappointing data center demand outlook, primarily due to inconsistent sales of its custom AI chips to major cloud providers. Investors had high hopes for chipmakers, given recent robust valuations, yet Nvidia's earnings report cast shadows over cloud demand.

During a post-earnings call on Thursday, Marvell's CEO, Matt Murphy, informed that the company expects data center revenue to remain flat in the third quarter. This news sparked investor and analyst concerns about growth in Marvell's key segment, which highlights the demand for AI data center hardware.

Analysts posited that Microsoft's postponement of its in-house AI chip to 2028 might bolster Marvell's business, as reliance on Marvell's custom chips could increase. Despite stiff competition from Broadcom, Marvell anticipates a stronger custom chip business in the fourth quarter, hinting at potential recovery later in the year.

(With inputs from agencies.)