Shares of Marvell Technology(NASDAQ: MRVL), which makes semiconductors for the data infrastructure market, dropped 14.9% in Wednesday's after-hours trading session following the company's release of its report for the fourth quarter of its fiscal year 2025 (ended Feb. 1). The quarter's revenue and earnings were essentially in line with Wall Street's estimates, as was first-quarter guidance for the top and bottom lines.
The main reason for the stock's decline was likely investor disappointment about guidance. Granted, Marvell's outlook was in line with Wall Street's expectations, but that's often not good enough for companies in the artificial intelligence (AI) space, where investors have particularly high expectations. Those high expectations were evident last year, as investors drove Marvell stock to a gain of 83.1% in 2024.
Marvell Technology's key numbers
Metric
Fiscal Q4 2024
Fiscal Q4 2025
Change YOY*
Revenue
$1.43 billion
$1.82 billion
27%
GAAP operating income
($33.3 million)
$235.2 million
Result flipped to positive from negative
GAAP net income
($392.7 million)
$200.2 million
Result flipped to positive from negative
Adjusted net income
$401.6 million
$531.4 million
32%
GAAP earnings per share (EPS)
($0.45)
$0.23
Result flipped to positive from negative
Adjusted EPS
$0.46
$0.60
30%
Data source: Marvell Technology. *Calculations by author, except for revenue change, which was provided by Marvell. YOY = year over year. GAAP = generally accepted accounting principles. Fiscal Q4 2025 ended Feb. 1.
Investors should focus mainly on the adjusted numbers, which exclude one-time items.
Wall Street was looking for an adjusted earnings per share (EPS) of $0.60 on revenue of $1.81 billion, so Marvell's results were essentially in line with both expectations. (Yes, the revenue result was slightly higher, but in my view, this beat was small enough to consider the result roughly in line with the consensus estimate.)
In the quarter, Marvell generated cash of $514 million running its operations, down 6% from the year-ago period. It ended the period with cash and equivalents of $948.3 million -- little changed from $950.8 million a year ago -- and long-term debt of $3.9 billion on its balance sheet.
Performance by end market
End Market
Fiscal Q4 2025 Revenue
Change YOY
Data center
$1.37 billion
78%
Enterprise networking
$171.4 million
(35%)
Carrier infrastructure
$105.8 million
(38%)
Consumer
$88.7 million
(38%)
Automotive/industrial
$85.7 million
4%
Total
$1.82 billion
27%
Data source: Marvell Technology. YOY = year over year.
The data center end market's robust performance was driven by continued strong demand for the company's AI-related products. These include custom AI chips -- which are application-specific integrated circuits (ASICs) -- and interconnect products for data centers processing AI workloads.
The company's other end markets are mostly rebounding. While revenue in enterprise networking and carrier infrastructure continued to decline year over year, revenue in both markets rose on a sequential-quarter basis. Their quarter-over-quarter revenue increases were 14% and 25%, respectively. In addition to eking out a 4% year-over-year increase, auto revenue edged up 3% sequentially.
The consumer end market is the only market whose revenue continued to decline year over year and sequentially. The sequential decline was only 8%, so it would seem this market could soon be rebounding off its lows.
What the CEO had to say
Here's much of CEO Matt Murphy's statement in the earnings release:
We closed fiscal year 2025 on a high note.... This performance was driven by strong growth in our data center end market, where revenue increased 78% year-over-year in the fourth quarter, along with a continued recovery in our multi-market businesses.
Guidance
For the first quarter of fiscal year 2026 (which ends in late April/early May), management expects:
Revenue of $1.875 billion, which equates to growth of 61% year over year
Adjusted EPS of between $0.56 and $0.66 ($0.61 at the midpoint), which equates to growth of 133% to 175% (154% at the midpoint)
Going into the release, Wall Street had been expecting fiscal Q1 2026 adjusted EPS of $0.60 on revenue of $1.87 billion. So, at the midpoint of the range, Marvell's outlook for revenue and earnings was essentially in line with the analyst consensus estimates.
A stock worth watching
Marvell turned in a strong quarter and outlook. The stock's post-earnings release decline seems a reflection of investors' expectations being too high. Given the current volatile geopolitical and macroeconomic environments (including the tariff war that began on Tuesday between the U.S. and our three largest trading partners, Canada, China, and Mexico), it would make sense for management to be more cautious than usual in its outlook.
For growth investors, Marvell stock is worth a place on your watch list. Demand from its data center end market should remain robust as tech companies continue to build out infrastructure to support powerful demand for AI capabilities. Moreover, the company's other end markets are mostly in recovery mode.
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