Marvell Technology Inc (NASDAQ:MRVL) delivered record revenue of $1.817 billion for the fourth quarter, growing 20% sequentially and 27% year-over-year.
The data center end market was a primary growth driver, with revenue growing 78% year-over-year, fueled by strong AI demand.
Marvell achieved GAAP profitability in the fourth quarter and expects this to continue in fiscal 2026.
The company reported record non-GAAP earnings per share of $0.60, growing 40% sequentially, demonstrating substantial operating leverage.
Marvell significantly increased capital returns to stockholders through stock repurchases and dividends totaling $933 million in fiscal 2025.
Negative Points
The consumer end market revenue declined 8% sequentially in the fourth quarter, with expectations of a further 35% decline in the first quarter of fiscal 2026.
The automotive and industrial end market is expected to decline sequentially in the high single digits in the first quarter of fiscal 2026.
GAAP operating margin was negative 12.5% for the full fiscal year 2025.
There is a potential risk of competition in the custom XPU market, as indicated by analyst concerns about competitors taking market share.
The company faces uncertainties in the timing and adoption of new technologies like co-packaged optics, which could impact future revenue growth.
Q & A Highlights
Q: Matt, I want to go back to the comments you had in your script about the confidence in growing with your lead XPU customer, not only this year but next year. How would you suggest we reconcile your confidence and their confidence simultaneously? A: We are very pleased with the ramp of our current lead XPU program, which we delivered with first-pass silicon success. We see significant volume production on the current generation and have been deeply engaged on the next generation of this AI XPU with this customer. We expect revenue from these custom XPUs to grow in fiscal '26 and fiscal '27 and beyond. Regarding the possibility of our customer working with someone else, we can't comment on that, but we have visibility for the products we will be building for them.
Q: Can you help quantify the mix between AI and non-AI in your data center for Q4 and Q1? Also, why is the extent of the beats somewhat modest compared to strong spending at your largest customer? A: AI is now more than half of our data center revenue, and this is expected to continue increasing. Our data center revenues have been growing significantly, with AI and cloud revenue up double digits from Q4 to Q1. The trajectory of our business is strong, with AI driving the majority of our growth. The mix continues to grow nicely with custom solutions ramping.
Q: You guided AI to $2.5 billion this year and mentioned you would exceed that in fiscal '26. What does "very significantly" mean in this context? A: We anticipate being substantially above the $2.5 billion target, though we're not putting a specific number on it yet. The momentum in the business and the opportunity set in front of us are strong, and we're trending extremely well. Our data center revenue is now 75% of Marvell, which is a good proxy for where things are going.
Q: Can you provide some color on the stickiness of your custom ASIC customers and the possibility of attaching networking products to these custom ASIC players? A: We have custom engagements with all four major hyperscalers, and these are complex chips. Customers look for partners with technology leadership, manufacturing scale, and flexible business models. The sockets are very sticky, but each generation requires competition. We continue to expand our design opportunities and have closed significant designs recently. Attaching networking products is extremely sticky and provides a compelling value proposition for our customers.
Q: How do you view the opportunity for co-packaged optics and its impact on your DSP business? A: Co-packaged optics is a compelling way to transition from passive to optical connectivity within the rack. We are investing in this area and have traction with our 6.4T product. This is a complex area with significant potential for power and performance breakthroughs. We are committed to competing with best-in-class technology, and while it will take time for industry-wide adoption, we see it as a critical part of our long-term technology investment.
