Marvell (MRVL +9%) is gaining investor confidence after its Q2 results. Despite challenging market conditions, the company reported in-line Q2 results and provided an optimistic Q3 revenue guidance.
- Data Center: Marvell's largest market, accounting for 69% of Q2 sales, saw revenue surge 92% year-over-year and 8% sequentially to a record $880.9 million. This exceeded prior guidance, driven by strong demand for electro-optics products, custom silicon ramp-up, and growth in storage and switch revenue.
- Custom Silicon: With increasing investment in AI and accelerated computing, Tier 1 cloud providers are focusing on custom silicon to enhance data center TCO and differentiation. Marvell's expertise in high-volume, high-complexity chips is attracting cloud customers.
- Q3 Outlook: Marvell forecasts Data Center revenue growth to accelerate into the high teens sequentially, primarily driven by AI custom silicon programs.
- Carrier and Enterprise: Revenue fell 54% year-over-year and 1% sequentially to $151 million. Despite a tough Q2, Marvell believes these markets have bottomed out in the first half of the fiscal year, with signs of growth expected. Sequential growth of mid-single digits is anticipated in Q3, with further improvement in Q4.
- Consumer: Segment revenue dropped 47% year-over-year but jumped 112% sequentially to $88.9 million due to a gaming inventory correction. Slight sequential growth is expected in Q3.
- Automotive/Industrial: Segment revenue decreased 31% year-over-year and 2% sequentially to $76.2 million, aligning with guidance for flat sequential growth. Marvell projects mid-single-digit sequential growth in Q3.
Overall, Marvell's Q2 report and guidance have positively influenced investor sentiment. The Data Center segment continues to thrive, driven by AI spending, while other segments show signs of recovery.
