Marvell Technology upgraded to ‘Buy’ by Bank of America as shares surge on Q4 report

Marvell Technology Group Ltd. (NASDAQ:MRVL) has been upgraded to a ‘Buy’ standing by Bank of America analysts pursuing the company’s 4th fourth net report, arsenic investors reacted positively to the company’s outlook and maturation initiatives.

The steadfast besides raised its terms people connected the banal to $110 from $90, arsenic the banal jumped astir 20% to $90.

The analysts cited Marvell’s leverage to AI optical connectivity, improved visibility connected Microsoft and Amazon customized spot (XPU) programs, and optimism astir the company’s maturation trajectory.

They wrote that the company’s net telephone accrued its assurance successful Marvell’s beardown presumption successful AI optical connectivity, its prospects with Microsoft’s upcoming customized spot (XPU) program, and the company’s advancement connected the Amazon XPU transition.

Marvell’s wide portfolio, spanning 800G/1.6T connectivity, optics, customized XPU, scale-out and scale-up switches, and related components, was highlighted arsenic a strategical strength.

“Our ~$2 billion/~$4 cardinal estimates successful MRVL's customized spot programme for calendar twelvemonth 2027/2028 provides important upside imaginable comparative to the multi-$100 cardinal capex astatine ample XPU customers (Amazon, Microsoft),” the analysts wrote, noting the company’s beardown marketplace stock successful optical DSP arsenic AI clusters expand.

The steadfast besides raised its fiscal twelvemonth 2027 and 2028 income estimates by 8% and 12%, respectively, with pro forma EPS projected astatine $3.82, up 34% year-over-year, for 2027 and $5.43, up 42% year-over-year, for 2028. “For the archetypal clip successful a agelong time, our out-year estimates are going up meaningfully,” the analysts wrote.

Despite the affirmative outlook, Bank of America flagged risks including little escaped currency travel comparative to peers and contention successful the XPU market.

“Competition successful some XPU ample programs remain, with lawsuit insourcing AND different outer plan partner, some up for marketplace stock gains,” the analysts wrote, besides noting imaginable headwinds from AI banal fatigue and underperformance earlier this year.

Marvell trades astatine astir 16 times calendar twelvemonth 27 estimated net and 4 times endeavor value-to-sales (EV/S), a valuation the analysts described arsenic compelling comparative to adjacent companies trading astatine 29 times PE and 9 times EV/S.