Marvell’s (MRVL) Data Center Machine Keeps Rewriting Its Own Forecast

Marvell’s (MRVL) Data Center Machine Keeps Rewriting Its Own Forecast Maham Fatima Tue, September 1, 2026 at 11:43 AM GMT+2 4 min read MRVL Marvell (NASDAQ: MRVL ) just told Wall Street its AI growth story keeps getting bigger rather than settling down. On its second-quarter fiscal 2027 earnings call, held August 27, the chipmaker posted record revenue of $2. 739 billion, up 37% year over year, while data center sales climbed 46% year over year to $2.

17 billion and now make up 79% of the business. Management raised its full-year outlook for the second consecutive quarter, a pattern that says more about the trajectory than any single number does. Marvell's (MRVL) Data Center Machine Keeps Rewriting Its Own Forecast Every Guidepost Keeps Moving Higher Marvell now expects fiscal 2027 revenue of roughly $12 billion, up from the $11.

5 billion outlook it gave investors just one quarter earlier, and fiscal 2028 revenue of about $18 billion, up $1. 5 billion from its prior estimate. What stands out is that the growth rate is accelerating even as the revenue base swells, with fiscal 2028 growth now pegged near 50% versus the roughly 45% management expected last quarter.

Data center growth guidance jumped to 60% for fiscal 2027 and more than 60% for fiscal 2028, up from an earlier 50% expectation, and third-quarter revenue guidance of $3. 15 billion at the midpoint implies better than 50% year-over-year growth. Custom silicon is a major piece of that story.

Marvell disclosed an expanded agreement and associated warrant with a major hyperscaler that carries potential cumulative revenue of $120 billion over roughly six years, and the custom business is expected to more than double in fiscal 2028 with further acceleration in fiscal 2029. On the connectivity side, 800 gig optical demand remains strong while 1. 6T products ramp quickly, 51.

2T switching gear is set to more than double scale-out switching revenue this year, and management pointed to data center interconnect bandwidth needs eventually running more than tenfold above today's networks. Profitability is scaling alongside all of it: non-GAAP operating margin hit 36. 6%, up 180 basis points year over year, putting the 38% to 40% long-term target within reach by the fourth quarter of this fiscal year, while non-GAAP earnings per share of $0.

94 grew 40% year over year. The Parts Of The Story Still Worth Watching Not everything is running ahead of schedule. Management acknowledged it is securing extra chip supply despite persistent industry-wide constraints, a reminder that Marvell's growth depends on capacity it does not fully control.

That dependency shows up on the balance sheet too: cash flow from operations slipped slightly to $606 million as the company leaned into roughly $1 billion of planned capacity prepayments to suppliers this fiscal year, tying up cash today for output tomorrow. Story Continues The custom silicon ramp that excites investors also carries a near-term cost, with third-quarter non-GAAP gross margin guided to 57. 5% to 58.

5%, below the 58. 9% just delivered, as the shifting product mix weighs on margin. Outside of data center, the communications and other segment remains uneven, with revenue expected to decline in the low-to-mid teens percentage range both sequentially and year over year in the third quarter before recovering in the fourth.

Total debt stood at $4. 96 billion at quarter end, though a net debt-to-EBITDA ratio of just 0. 27x suggests that load is manageable relative to earnings power.

What The Market Is Pricing In Today Hedge fund ownership rose to 96 funds from 79 in the prior quarter, which reads as institutions building conviction rather than trimming it. Short interest sits at just 3. 79% of float, indicating little organized skepticism toward the stock right now.

Against that backdrop, shares trade at a forward P/E of 59. 52 as of August 31, a multiple that assumes a great deal of the growth management just guided toward actually shows up. Where The Next Chapter Gets Written Marvell's business is compounding on nearly every front, from data center connectivity to custom silicon, and management keeps raising the bar it just cleared.

The tension is that the stock's valuation already assumes much of that continues without a hiccup in a supply-constrained industry. For the bulls, the case rests on hyperscalers keeping their AI infrastructure spending on the current trajectory through fiscal 2028 and beyond. While we acknowledge the potential of MRVL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk.

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