For much of the year, Marvell Technology (MRVL 0.56%) stock has been struggling. And its year-to-date performance (as of Aug. 4) still isn't good: It's down 31%. But in the past three months, the stock has rallied by around 23%, as it's showing signs of life again.

Is it just the stock's low valuation that is enticing tech investors to take a chance on Marvell, or are there catalysts behind the recent rally, which could potentially help send its value even higher in the future?

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Easing U.S.-China relations has made investors bullish

On June 26, Marvell's stock hit highs of more than $80, approaching levels it hadn't been at in months. That was the day the U.S. and China agreed to a trade deal involving rare earth minerals, and which signified an improvement in relations between the two countries.

For Marvell, that's a big factor to consider when investing in the business, as China accounted for 37% of its revenue in the most recent quarter (which ended May 3). And sales to Taiwan totaled another 17%, which means that more than half of its revenue is tied to that region. The company says that 74% of its shipments are to customers that have operations in Asia. As a result, tariffs and geopolitical issues may weigh more on Marvell than they might on other chipmakers.

Strong demand from tech giants is likely to continue

Marvell makes application-specific integrated circuits, which are custom chips that help large tech companies manage their artificial intelligence (AI) demands and workloads. The business is vulnerable, however, to the large tech players. And some investors and analysts worry about the potential for growing competition in the custom chip market, and the possibility that will diminish some of Marvell's growth. Plus, if economic conditions deteriorate, tech companies may cut back on some of their aggressive AI spending.

Recently, however, an analyst report from investment firm Fubon suggested that Microsoft, one of Marvell's key customers, was finding internal chip work difficult, highlighting why the easiest option for the tech giant may be to simply rely on Marvell rather than making its own chips. And with Microsoft still investing heavily in AI, that means Marvell could be poised to benefit from those plans. Fubon suggested that due to its potential upside, Marvell wasn't a good stock to short at around $70. Ironically, in doing so, it created a bullish case for owning shares of the tech company.

Microsoft's AI chip development is reportedly not going as well as planned, and it may not be until 2026 that it has one that's ready to go. And even then, it may not be up to par with what's available in the market. That's good news for Marvell, because if other companies encounter similar challenges, it bolsters the case for going to a third party for chip development (such as Marvell) rather than trying to do it in-house.

Marvell, however, faces challenges of its own, as in the trailing 12 months it has incurred a net loss of $492 million.

Is Marvell Technology a stock to buy?

Marvell possesses some promising growth potential in AI, and it's trading at 26 times its estimated future earnings (based on analyst expectations). By comparison, the average stock in the S&P 500 index trades at around 24 times its projected profits. While Marvell may not look like a dirt cheap buy, it's down 40% from its 52-week high of $127.48

There is some risk with the business given its dependence on leading tech companies spending heavily on AI and its exposure to Asian markets, plus its inconsistent bottom line, but Marvell is still one of the cheaper AI stocks to own right now. If you're investing in the long term and are willing to be patient, it could be a good buy.