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Marvell projects total revenues for the fiscal second quarter of $1.25 billion (+/- 5%). The Zacks Consensus Estimate for revenues is pegged at $1.25 billion, which indicates a decrease of 6.7% from the year-ago quarter’s reported figure.
MRVL anticipates non-GAAP earnings per share (EPS) of 29 cents (+/- 5 cents) for the second quarter. The consensus mark for non-GAAP EPS has remained unchanged at 29 cents, which calls for a 12.1% decline from the year-ago quarter.
Image Source: Zacks Investment Research
Marvell’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters and matched once, the average surprise being 2.5%.
Let’s see how things have shaped up before this announcement.
Factors Shaping MRVL’s Upcoming Results
Marvell’s second-quarter performance is likely to have been negatively impacted by softness in its product demand as enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. Moreover, continued inventory correction actions by customers are likely to have hurt the company’s overall performance in the to-be-reported quarter.
Marvell is projected to report a massive year-over-year decline in revenues across the majority of its end-market segments, including the Enterprise Networking, Carrier Infrastructure, Automotive/Industrial and Consumer end markets.
The ongoing inventory correction and weak demand environment are likely to have hurt Enterprise Networking’s top-line performance. Our second-quarter revenue estimate for Enterprise Networking is pegged at $153 million, which indicates a year-over-year decline of 53.3%.
A slowdown in IT spending as telecom carriers manage their capital expenditure amid ongoing macroeconomic uncertainties is anticipated to have negatively impacted the Carrier Infrastructure end-market’s revenues. Moreover, the end market’s overall performance is anticipated to have been hurt by the completion of the initial wave of the 5G rollout. Our second-quarter revenue estimate for the Carrier Infrastructure is pegged at $71.7 million, which implies a year-over-year decline of 74%.
Our model estimates for the Automotive/Industrial and Consumer end markets are pegged at $77.7 million and $83.9 million, calling for a decline of 29.5% and 50%, respectively. A weak demand environment and inventory correction measures are likely to have hurt sales performances in these end markets.
However, the negative impact of the dismal performance across the aforementioned divisions is likely to have been partially offset by improved performance in the Data Center end market. Strong growth in compute programs for artificial intelligence is projected to have driven the segment’s performance. Our estimate for the Data Center division’s second-quarter revenues is pegged at $863.5 million, which suggests a year-over-year increase of 87.8%.
MRVL Stock Price Performance & Valuation
Year to date (YTD), Marvell shares have soared 15.6%, underperforming the S&P 500’s increase of 17.8%. In the semiconductor industry space, the MRVL stock has underperformed NVIDIA Corporation (NVDA - Free Report) but outperformed Micron Technology, Inc. (MU - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) .
Image Source: Zacks Investment Research
Now, let’s look at the value Marvell offers investors at the current levels. MRVL stock is trading at a premium with a forward 12-month price-to-earnings multiple of 35.34X compared with the S&P 500’s 21.65X.
Image Source: Zacks Investment Research
US-China Tech War Might Hurt MRVL Stock’s Performance
Marvell’s long-term growth prospects remain promising. The company is well-positioned to benefit from the booming artificial intelligence (AI) market. Although Marvell's chips don't directly process AI tasks, they play a crucial role in managing and transporting the massive data generated by AI applications. As data centers upgrade with advanced graphic processing units (GPUs) from NVIDIA and AMD to handle AI workloads, the demand for Marvell's data-handling solutions is expected to increase.
However, Marvell is currently facing significant challenges that could impact its share price performance in the near term. One of the most pressing concerns is the U.S. government’s tightening restrictions on semiconductor exports to China.
China represents a substantial market for Marvell, accounting for more than 45% of its total revenues in the first quarter of fiscal 2025. The increasing export controls could lead to a meaningful reduction in sales to Chinese customers, which could weigh on Marvell’s overall revenue growth.
In addition to the potential effect on sales, the export restrictions could disrupt Marvell’s supply chain, leading to increased costs and delays in product development. This would be particularly problematic as Marvell competes in an industry where technological innovation and time-to-market are critical to maintaining a competitive edge.
Conclusion
While the long-term outlook for Marvell remains bright, the near-term challenges associated with chip export restrictions to China and the stock’s high valuation warrant a more cautious approach. The bearish sentiment is further underscored by this Zacks Rank #4 (Sell) company's underperformance relative to the broader market.
Holding on to MRVL stock in the current environment could mean riding out a prolonged period of underperformance. For investors looking to maximize returns, selling the shares of the company now could be a prudent move.
Image: Bigstock
Should You Buy, Hold or Sell Marvell Stock Ahead of Q2 Earnings?
Marvell Technology, Inc. (MRVL - Free Report) will report second-quarter fiscal 2025 results on Aug. 29 after market close.
Marvell projects total revenues for the fiscal second quarter of $1.25 billion (+/- 5%). The Zacks Consensus Estimate for revenues is pegged at $1.25 billion, which indicates a decrease of 6.7% from the year-ago quarter’s reported figure.
MRVL anticipates non-GAAP earnings per share (EPS) of 29 cents (+/- 5 cents) for the second quarter. The consensus mark for non-GAAP EPS has remained unchanged at 29 cents, which calls for a 12.1% decline from the year-ago quarter.
Image Source: Zacks Investment Research
Marvell’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters and matched once, the average surprise being 2.5%.
Marvell Technology, Inc. Price and EPS Surprise
Marvell Technology, Inc. price-eps-surprise | Marvell Technology, Inc. Quote
Let’s see how things have shaped up before this announcement.
Factors Shaping MRVL’s Upcoming Results
Marvell’s second-quarter performance is likely to have been negatively impacted by softness in its product demand as enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. Moreover, continued inventory correction actions by customers are likely to have hurt the company’s overall performance in the to-be-reported quarter.
Marvell is projected to report a massive year-over-year decline in revenues across the majority of its end-market segments, including the Enterprise Networking, Carrier Infrastructure, Automotive/Industrial and Consumer end markets.
The ongoing inventory correction and weak demand environment are likely to have hurt Enterprise Networking’s top-line performance. Our second-quarter revenue estimate for Enterprise Networking is pegged at $153 million, which indicates a year-over-year decline of 53.3%.
A slowdown in IT spending as telecom carriers manage their capital expenditure amid ongoing macroeconomic uncertainties is anticipated to have negatively impacted the Carrier Infrastructure end-market’s revenues. Moreover, the end market’s overall performance is anticipated to have been hurt by the completion of the initial wave of the 5G rollout. Our second-quarter revenue estimate for the Carrier Infrastructure is pegged at $71.7 million, which implies a year-over-year decline of 74%.
Our model estimates for the Automotive/Industrial and Consumer end markets are pegged at $77.7 million and $83.9 million, calling for a decline of 29.5% and 50%, respectively. A weak demand environment and inventory correction measures are likely to have hurt sales performances in these end markets.
However, the negative impact of the dismal performance across the aforementioned divisions is likely to have been partially offset by improved performance in the Data Center end market. Strong growth in compute programs for artificial intelligence is projected to have driven the segment’s performance. Our estimate for the Data Center division’s second-quarter revenues is pegged at $863.5 million, which suggests a year-over-year increase of 87.8%.
MRVL Stock Price Performance & Valuation
Year to date (YTD), Marvell shares have soared 15.6%, underperforming the S&P 500’s increase of 17.8%. In the semiconductor industry space, the MRVL stock has underperformed NVIDIA Corporation (NVDA - Free Report) but outperformed Micron Technology, Inc. (MU - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) .
Image Source: Zacks Investment Research
Now, let’s look at the value Marvell offers investors at the current levels. MRVL stock is trading at a premium with a forward 12-month price-to-earnings multiple of 35.34X compared with the S&P 500’s 21.65X.
Image Source: Zacks Investment Research
US-China Tech War Might Hurt MRVL Stock’s Performance
Marvell’s long-term growth prospects remain promising. The company is well-positioned to benefit from the booming artificial intelligence (AI) market. Although Marvell's chips don't directly process AI tasks, they play a crucial role in managing and transporting the massive data generated by AI applications. As data centers upgrade with advanced graphic processing units (GPUs) from NVIDIA and AMD to handle AI workloads, the demand for Marvell's data-handling solutions is expected to increase.
However, Marvell is currently facing significant challenges that could impact its share price performance in the near term. One of the most pressing concerns is the U.S. government’s tightening restrictions on semiconductor exports to China.
China represents a substantial market for Marvell, accounting for more than 45% of its total revenues in the first quarter of fiscal 2025. The increasing export controls could lead to a meaningful reduction in sales to Chinese customers, which could weigh on Marvell’s overall revenue growth.
In addition to the potential effect on sales, the export restrictions could disrupt Marvell’s supply chain, leading to increased costs and delays in product development. This would be particularly problematic as Marvell competes in an industry where technological innovation and time-to-market are critical to maintaining a competitive edge.
Conclusion
While the long-term outlook for Marvell remains bright, the near-term challenges associated with chip export restrictions to China and the stock’s high valuation warrant a more cautious approach. The bearish sentiment is further underscored by this Zacks Rank #4 (Sell) company's underperformance relative to the broader market.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Holding on to MRVL stock in the current environment could mean riding out a prolonged period of underperformance. For investors looking to maximize returns, selling the shares of the company now could be a prudent move.
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