It has been about a month since the last earnings report for Marvell Technology (MRVL). Shares have lost about 6.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Marvell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Marvell Q3 Earnings and Revenues Surpass Estimates

Marvell reported third-quarter fiscal 2025 non-GAAP earnings of 43 cents per share, decisively exceeding the Zacks Consensus Estimate by 7.5%. Quarterly earnings also came ahead of the midpoint of the company’s guidance of 40 cents (+/- 5 cents). Furthermore, the bottom line increased by 4.9% due to higher revenues and effective cost management.

Marvell’s third-quarter fiscal 2025 revenues of $1.52 billion beat the Zacks Consensus Estimate by 4.3%. The top line was also above the midpoint of management’s guidance of $1.45 billion (+/- 5%). Third-quarter revenues grew 7% year over year, mainly driven by better sales execution and robust demand for artificial intelligence.

Marvell’s Q3 End Market Details

Marvell’s top-line growth was supported by impressive performances across its segments, which rose sequentially while the data center segment registered phenomenal growth both year over year and quarterly.

Data center revenues of $1.1 billion increased 98% year over year and 25% sequentially. The solid momentum in electro-optics products, custom silicon, storage and switch divisions primarily drove the robust year-over-year and sequential increase. The segment accounted for 73% of the quarter’s total revenues, demonstrating that it is currently MRVL’s largest end market. Our estimate for Data Center’s fiscal third-quarter revenues was pegged at $1.04 billion.

Revenues from enterprise networking dropped 44% year over year to $150.9 million and accounted for 10% of the total revenues. The year-over-year decline was primarily due to the weak demand environment and ongoing inventory correction in this end market. Our estimate for enterprise networking’s fiscal third-quarter revenues was pegged at $158.7 million.

Carrier infrastructure revenues, which accounted for 6% of the total revenues, plunged 73% year over year to $84.7 million due to a soft demand environment and ongoing inventory correction. Our estimate for the division’s fiscal third-quarter revenues was pegged at $79.6 million. Carrier and enterprise networking collectively grew 4% sequentially.

Automotive/Industrial revenues declined 22% year over year but improved 9% sequentially to $82.9 million due to inventory correction measures adopted by customers of this end market. Revenues from this segment constituted 5% of the total revenues. Our estimate for the Automotive/Industrial’s fiscal third-quarter revenues was pegged at $79.9 million.

Consumer revenues, representing 6% of the total revenues, decreased 43% year over year while growing 9% sequentially to $96.5 million. Our estimate for Consumer’s fiscal second-quarter revenues was pegged at $89.9 million.

Marvell's Q3 Operating Details

Marvell’s non-GAAP gross profit of $917.1 million reflected an increase of 6.7% on a year-over-year basis. The non-GAAP gross margin of 60.5% contracted 10 basis points (bps) on a year-over-year basis and 140 bps sequentially.

Non-GAAP operating expenses totaled $466.9 million compared with $437.1 million in the year-ago quarter and $455.8 million in the previous quarter.

Marvell’s non-GAAP operating margin of 29.7% contracted 10 bps year over year. However, it expanded 360 bps sequentially.

Marvell’s Balance Sheet & Cash Flow

As of Nov. 2, 2024, MRVL’s cash and cash equivalents were $868.1 million compared with $808.7 million in the previous quarter.

The company’s long-term debt totaled $3.97 billion, slightly lower than the previous quarter’s $3.99 billion.

Cash flow from operations for the third quarter was $536.3 million.

Marvell Initiates Guidance for Q4

For the fourth quarter of fiscal 2025, Marvell expects revenues to be $1.800 billion (+/- 5%). The non-GAAP gross margin is projected to be 60%, while non-GAAP operating expenses are estimated to be $480 million. The company projects non-GAAP earnings per share for the fiscal fourth quarter to be 59 cents per share (+/-5 cents per share).

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 26.76% due to these changes.

VGM Scores

Currently, Marvell has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Marvell has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Marvell is part of the Zacks Electronics - Semiconductors industry. Over the past month, Ambarella (AMBA), a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended October 2024 more than a month ago.

Ambarella reported revenues of $82.65 million in the last reported quarter, representing a year-over-year change of +63.3%. EPS of $0.11 for the same period compares with -$0.28 a year ago.

For the current quarter, Ambarella is expected to post a loss of $0.01 per share, indicating a change of +95.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Ambarella has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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