Nvidia CEO Jensen Huang Says This Is the Next Trillion-Dollar AI Chip Stock. Is He Right?

That's wherefore investors wage adjacent attraction to what Huang has to say. On signifier astatine Computex Week successful Taipei, Huang presented with Marvell Technology (NASDAQ: MRVL) CEO Matt Murphy, describing his company's chips arsenic essential. "That's wherefore you're going to beryllium the adjacent trillion-dollar company," Huang said.

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Marvell banal has skyrocketed since those comments, and it sports a marketplace headdress of astir $278 cardinal arsenic of this writing. If Huang is right, though, the banal could astir quadruple from here.

Is Marvell the adjacent trillion-dollar company?

Marvell specializes successful optical interconnect chips that transmit information astatine ultra-high speeds. As Huang said, those chips are indispensable for optimizing information centers afloat of expensive, high-powered GPUs. Ensuring information is routed to wherever it needs to beryllium arsenic rapidly arsenic imaginable tin supply an tremendous outgo savings astatine the hyperscale level.

To that end, Marvell and Nvidia agreed earlier this twelvemonth to enactment closely, utilizing Nvidia's NVLink level to optimize spot designs crossed Marvell's portfolio. That coincided with Nvidia investing $2 cardinal of its currency successful Marvell stock.

Management raised its outlook for the interconnect concern with its first-quarter net study past month. It present expects 70% year-over-year maturation for the segment. That should enactment wide gross maturation of 40% for the afloat year, with continued acceleration into 2028.

Another cardinal operator of gross maturation successful fiscal 2028 and beyond is Marvell's customized AI accelerator (XPU) business. Management said it expects the comparatively tiny conception to turn 20% this year, but it volition treble successful 2028 arsenic a large tier-1 XPU lawsuit (likely Microsoft) begins measurement production. Management forecast $10 cardinal successful gross from customized AI chips by fiscal 2029. To enactment that successful perspective, that's much than Marvell's full gross past year.

There's nary uncertainty Marvell is good positioned to make important gross maturation implicit the adjacent fewer years, acknowledgment to its pb successful networking chips and rapidly increasing customized compute business. While Huang didn't acceptable a timeline for his $1 trillion declaration, Marvell would request to scope a trailing price-to-sales ratio of astir 40 successful aboriginal 2029, based connected management's guidance and commentary. Its trailing P/E ratio would person to scope 127 based connected analysts' existent estimates. For reference, Nvidia presently trades for 21 times income and 33 times earnings.