Marvell's tepid revenue forecast reignites AI spending fears, shares slump

By Arsheeya Bajwa

(Reuters) - Marvell Technology tumbled 16% and dragged down rival chipmakers connected Thursday, aft an in-line gross forecast gave investors different crushed to beryllium jittery astir spending connected AI infrastructure, arsenic a years-long rally shows signs of cooling.

Wall Street had looked to net from Marvell, a cardinal supplier of customized AI chips to Big Tech, for signs of enduring request that has powered U.S. marketplace gains since ChatGPT ignited the generative AI roar successful precocious 2022.

But the company's current-quarter gross forecast, $10 cardinal supra estimates, did small to allay fears astir the request for large investments connected AI infrastructure sparked by low-cost breakthroughs from Chinese startup DeepSeek.

Investors are present awaiting Broadcom's results, owed aboriginal connected Thursday, arsenic the astir important supplier successful the customized AI spot space, with Marvell ranked second.

Shares of Broadcom fell 4%, portion Nvidia slid 2%.

The spot assemblage has besides taken a deed from the tariffs imposed by President Donald Trump connected countries including China. The broader Philadelphia Semiconductor Index is down 5% truthful acold successful 2025, aft a summation of astir 20% past year.

"Sentiment is unsmooth for AI semiconductor stocks close now," Melius Research analysts said. "The antagonistic absorption (for Marvell) stems from what was lone a flimsy gross bushed and raise."

Marvell, which concisely overtook Intel successful marketplace worth past year, was acceptable to suffer $12 billion, if premarket stock losses hold. The banal roseate much than 83% successful 2024, but has declined astir 18% truthful acold this year.

Marvell exceeded its fiscal 2025 people of $1.5 cardinal successful AI revenue, and expects to outdo its projections of $2.5 cardinal successful AI income successful fiscal 2026, CEO Matt Murphy said connected a post-earnings call.

J.P. Morgan analysts attributed the tepid outlook to "a slowdown successful on-premise datacenter products," referring to weaker request for ethernet cables and fibre channels that transportation information crossed servers.

As Big Tech shifts spending to AI chips, request for networking instrumentality — Marvell's halfway concern — has weakened.

Custom chips besides output little margins than off-the-shelf processors. Marvell expects adjusted April-quarter gross borderline of astir 60%, down much than 2 percent points from a twelvemonth earlier.

At slightest 9 brokerages chopped their terms targets for Marvell aft the results, with median astatine $130 arsenic per LSEG, representing a 44% upside to the stock's past closing price.

(Reporting by Arsheeya Bajwa successful Bengaluru; Editing by Sriraj Kalluvila)