We recently published a list of Top 10 Trending AI Stocks Amid Latest News and Analyst Ratings. Since Marvell Technology Inc (NASDAQ:MRVL) ranks 9th on the list, it deserves a deeper look.
The reality is finally catching up to the AI hype as investors await to see ROI on huge spending on AI chips and infrastructure. Dan Niles, Niles Investment Management founder and portfolio manager, during an interview with CNBC last month, called the decline in Mag. 7 stocks after Q2 earnings representative of a “fundamental shift” in the industry.
“I know it’s popular to talk about AI because these stocks are driving the market, but at a certain point, you want to get a return on all of this money you are investing. And if your forward revenue estimate is going lower not higher but your CapEx is going up, at some point those two things are going to collide.”
Niles said that major tech companies went through a “digestion” period after seeing huge returns during the COVID-19 pandemic days, and he expects the same to happen as we move into the next year.
The analyst said that on an equal-weighted basis, the broader market is up when compared with Mag. 7 stocks. He recommended investors to buy the stocks that would benefit from rate cuts. These include consumer staples, utilities, telecom services, etc.
Niles said the other 493 companies could drive the market to new “all-time record highs.”
For this article, we picked 10 AI trending stocks that are moving after latest analyst ratings and earnings. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 74
Marvell Technology Inc (NASDAQ:MRVL) recently impressed Wall Street with its latest quarterly results.
Wall Street analysts are bullish on Marvell Technology Inc (NASDAQ:MRVL) because the company’s products are used in key products sold by major companies. Its 1.6T optical DSP is used in Nvidia’s (NVDA) Blackwell GPU platform while AI ASICS are used in Amazon’s (AMZN) Trainium 2 AI processor and Google’s (GOOG)(GOOGL) Axion CPU processor.
J.P. Morgan analyst Harlan Sur estimates that Marvell Technology Inc (NASDAQ:MRVL) will ship $575 million and $600 million in AI ASICs this year—well above their earlier estimate of $500 million. By year’s end, they expect Marvell Technology Inc (NASDAQ:MRVL) to hit a quarterly run rate of $300 million, compared to the previous target of $200 million.
In the second quarter, the company’s data center sales skyrocketed 92% year-over-year.
“Even more crucial, the company’s cyclical businesses are now on the upswing, with AI and cyclical tailwinds likely propelling a multi-quarter period of positive EPS revisions into CY25,” Sur noted.
Evercore ISI increased its price target for the stock to $98 from $91 following the results. The firm’s analysts Mark Lipacis and Natalia Winkler said Marvell Technology Inc (NASDAQ:MRVL) is riding two AI growth waves—custom ASICs and Electro-Optics—while its higher-margin Enterprise and Carrier businesses are rebounding from a two-year inventory slump.
Barclays also raised its price target to $85 from $80, maintaining an Overweight rating.
“We still like Marvell Technology Inc (NASDAQ:MRVL) story, with AI product ramps expected to drive further upside through next year, complementing core business growth fueled by accelerating fundamentals outside the data center,” analyst Tom O’Malley said.
O’Malley previously said that the potential Blackwell delays won’t affect the broader semiconductor supply chain and said Marvell is well-positioned to benefit from the launch of Blackwell and the increased demand for high-speed networking. He highlighted that Marvell’s custom ASIC business is expected to see growth, as key customers remain committed to accelerating orders. O’Malley also pointed to Credo’s (CRDO) recent earnings update, which he sees as confirmation that at least one major customer is moving forward with significant orders.
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
Overall, Marvell Technology Inc (NASDAQ:MRVL) ranks 9th on Insider Monkey’s list titled Top 10 Trending AI Stocks Amid Latest News and Analyst Ratings. While we acknowledge the potential of Marvell Technology Inc (NASDAQ:MRVL), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.