Marvell Technology Group Ltd. (NASDAQ:MRVL) shares fell sharply after the company issued a sales forecast that came in below Wall Street expectations, overshadowing record second quarter results fueled by strong demand in artificial intelligence.
For Q2, Marvell reported adjusted earnings of $0.67 per share and revenue of $2.01 billion, both in line with analyst estimates. Revenue rose 58% year-over-year, while adjusted earnings grew 123%.
Growth was driven by rising demand for custom silicon and electro-optics products in AI applications, along with recovery in enterprise networking and carrier infrastructure.
Third quarter guidance below market forecasts saw Marvell’s shares retreat, down 16.3% at about $65 in early trade on Friday.
The company expects adjusted earnings of $0.74 per share and revenue of $2.06 billion at the midpoint, compared to analyst projections of $2.11 billion.
Marvell CEO Matt Murphy highlighted record quarterly revenue and expanding demand for AI-related products, noting that the company is currently engaged in over 50 custom AI design opportunities with more than 10 customers.
"Marvell delivered record revenue of $2.006 billion in the second quarter – a 58% year-over-year increase – and we expect continued growth into the third quarter, accompanied by operating margin and earnings per share expansion," Murphy said.
Analysts at Wedbush noted the weak Q3 guidance but said a recovery is expected in Q4 on strong optics growth.
“We find the ASIC result somewhat surprising in light of positive feedback from the Taiwanese supply chain back in the mid-summer period around AWS ASIC requirements and server builds,” they wrote.
“Generally, we believe Marvell will remain a more controversial name in the intermediate term given clear strong growth opportunities/expectations around custom ASICs, but also concerns around Marvell's eventual share in this space.”