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By Jaspreet Singh<\/p>\n
March 5 (Reuters) – Marvell Technology (MRVL) forecast fiscal 2028 revenue above Wall Street estimates on Thursday, signaling robust demand for custom chips and interconnect solutions used in artificial intelligence data centers, sending its shares \u200csurging 11% in premarket trading on Friday.<\/p>\n
Growing adoption of AI tools has boosted demand for specialized chips such as Marvell’s custom \u200capplication-specific integrated circuits used in advanced data centers, as well as its interconnect technologies that enable high-speed data transfer between processors, memory and servers.<\/p>\n
Big Tech \u200bfirms including Alphabet (GOOG, GOOGL), Microsoft (MSFT), Amazon (AMZN) and Meta (META) are expected to spend at least $630 billion to build AI infrastructure this year, lifting demand for chips used in servers and networking equipment from companies such as Marvell.<\/p>\n
That spending is flowing to Marvell through its data center business, President and Chief Operating Officer Chris Koopmans said in an interview.<\/p>\n
“They’re still growing massively,” he said.<\/p>\n
Marvell expects revenue to grow nearly 40% \u200cand approach $15 billion in fiscal 2028, above \u2060analysts’ average estimate of $12.92 billion, according to data compiled by LSEG.<\/p>\n
The company also raised its fiscal 2027 revenue forecast to grow more than 30% year over year, nearing $11 billion, compared with its earlier \u2060expectations of about $10 billion revenue.<\/p>\n
“We’re sitting here looking at hyperscalers (capital spending) plans for the year, and we’re able to look at our booking rate, and we feel very confident in hitting those numbers,” Koopmans said.<\/p>\n
It expects revenue of around $2.40 billion, plus or minus 5%, for the \u200bfirst \u200bquarter, above estimates of $2.27 billion. The company said the quarterly forecast \u200bincludes expected results of Celestial AI and XConn Technologies.<\/p>\n
Marvell \u200cdivested its automotive ethernet business last year and completed the acquisition of Celestial AI in a deal worth $3.25 billion, doubling down on photonic fabrics, a technology that uses light rather than electrical signals to connect AI chips and memory chips.<\/p>\n
Marvell and rival Broadcom (AVGO) help cloud-computing companies design custom chips tailored to their data-center workloads, a fast-growing business as hyperscalers seek alternatives to Nvidia’s (NVDA) general-purpose AI processors.<\/p>\n
The custom chip business amounts to roughly 10% to 15% of the company’s revenue and the company expects that \u200cto continue to grow, Koopmans said.<\/p>\n
“Marvell’s shares like many AI-related names have \u200bunderperformed the semiconductor group in the past two quarters. We think the better-than-expected \u200bresults and outlook, while expected, is more of a \u200brelief for investors than confirming the near-term data center spending strength,” said Kinngai Chan, senior research \u200canalyst at Summit Insights.<\/p>\n<\/p><\/div>\n
Broadcom on Wednesday said it expected \u200bover $100 billion in AI chip \u200bsales next year, signaling rapid share gains in a market dominated by Nvidia, which last month reported better-than-expected results for the January quarter.<\/p>\n\n
For the fourth quarter, Marvell reported a 22% increase in revenue to $2.22 billion, slightly above estimates of $2.21 \u200bbillion. Adjusted earnings per share of 80 \u200ccents beat estimates of 79 cents.<\/p>\n
Revenue in the data center segment, its largest business, rose 21% to $1.65 billion, \u200bcompared with estimates of $1.64 billion.<\/p>\n
(Reporting by Jaspreet Singh in Bengaluru, additional reporting by Max A. Cherney in \u200bSan Francisco; Editing by Tasim Zahid, Alan Barona and Chris Reese)<\/p>\n<\/p><\/div>\n