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Marvell Technology (NASDAQ:MRVL) took a big hit on Thursday, dropping 17.58% to $74.29 as of 13:33 ET, after its fourth-quarter earnings and guidance failed to impress Wall Street. The numbers were mostly in line with expectations, but in today's market, that wasn't enough.
Needham's N. Quinn Bolton summed it up: Investors aren't satisfied with just meeting expectations. He kept his Buy rating but slashed his price target to $100 from $120, even as Marvell said it's on track to bring in over $2.5 billion in AI revenue in fiscal 2026. Citi's Atif Malik also cut his target, pointing out that investors may have overestimated AI-related growth for the near term.
There's also some unease around Marvell's relationship with Amazon (NASDAQ:AMZN). While Marvell won the contract for Trainium 2.5 Ultra, Amazon is reportedly working on Trainium 3 in-house, which could limit Marvell's future gains.
Adding to the pressure, Summit Insights Group's Kinngchai Chan downgraded the stock to Hold, saying the company doesn't have the financial flexibility to navigate AI-related challenges as smoothly as some of its competitors.
Bottom line? Marvell's earnings weren't bad, but expectations for AI stocks are sky-highand right now, anything short of a home run is getting punished.
This article first appeared on GuruFocus.