The recent gains put Marvell's market capitalization above that of beleaguered Intel, which has 10 times the annual revenue of Marvell. Marvell's recent trajectory suggests that the revenue gap will continue to narrow. Explosive growth in the data center business has finally reached a point where it can more fully offset weakness in the company's traditional business units, which sell chips used in goods such as telecommunications equipment, cable boxes and cars.
In the financial quarter that just ended, Marvell's data center sales nearly doubled year-on-year to $1.1 billion. Marvell's forecast for this period shows that the company will end the current fiscal year in January, and the data center segment will account for 72% of total revenue, up from 40% in the previous year.
Marvell's latest deal with Amazon is a five-year "multi-generation" agreement that will see Marvell help Amazon design artificial intelligence chips. Amazon, the world's largest cloud computing service provider, has been aggressively expanding its in-house chip business, in part to reduce its reliance on NVIDIA for key artificial intelligence components. Amazon announced the next generation of its largest artificial intelligence chip, Trainium, at its annual developer conference this week. Analysts believe Trainium will more than double Marvell's revenue from customized AI products in the next fiscal year ending in January 2026.
That's expected to push Marvell's annual revenue to more than $8 billion in fiscal 2026, up 40% from this year's forecast, according to VisibleAlpha consensus estimates. In addition, Marvell is expected to grow 20% next year when it will produce customized artificial intelligence chips for another unnamed large technology customer (analysts believe it is Microsoft). Mark Lipacis, an analyst at Evercore ISI, predicts that the custom AI chip industry will generate sales of $30 billion to $50 billion by 2030. Marvell "has the potential to capture one-third of this market," he said in a note to clients last week. "
The article points out that the Marvell CEO "is one of the potential successors to Intel's recently stepped down Pat Gelsinger," which means he must assure investors on the earnings call that he will remain at Marvell.