By Adam Levine

When Marvell Technology reports its first quarter earnings on Thursday afternoon, all attention will be on its red-hot data center segment, which is driving the company's revenue.

Wall Street analysts expect earnings per share of 61 cents, up from 24 cents a year ago. Revenue is expected to come in at $1.9 billion, up 62% from 2024.

Like rival Broadcom, Marvell is downwind of a trend that began in 2010 and is accelerating in the 2020s. Apple's A4 chip that powered iPhone 4 was a landmark case of a company taking control over its own chip road map rather than being tied to a smartphone chip vendor like Samsung. Since 2020, Apple has designed the main chips in all its products.

Finding Nvidia GPUs expensive and hard to obtain, Google came to the same conclusion in 2015, and began making custom AI hardware still in use today. Now the hyperscalers -- Amazon.com AWS, Microsoft Azure and Google Cloud -- all make custom chips that compete with their traditional vendors like Nvidia and Intel.

Marvell designs data center chips for AWS and likely the other hyperscalers, as well. Sales in its data center segment were up 88% annually in fiscal 2025, which ended in February. Combined revenue in Marvell's other four segments was down 51%. Data center revenue made up 72% of Marvell's total in 2025, up from 41% in 2023, so it is now the make-or-break segment.

For the first quarter, analysts are expecting data center revenue to grow by 76% over the previous year, with the other combined segments growing by 28% against weak comparisons from the year before.

Like many stocks that have been part of the "AI trade," Marvell has had a rough 2025 after strong returns in 2024. Marvell shares are down 42% on the year. It ended 2024 with a price-to-earnings ratio of 41.5 for the next 12 months, and now its forward P/E is 21.0, below Marvell's three-year average of 29.0.

Write to Adam Levine at adam.levine@barrons.com

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May 29, 2025 11:22 ET (15:22 GMT)

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