By Angela Palumbo
Marvell Technology stock jumped sharply in after-hours trading Tuesday after the company forecast stronger-than-expected growth in its data-center segment.
Marvell reported third-quarter adjusted earnings of 76 cents a share on revenue of $2.08 billion. Analysts surveyed by FactSet were expecting earnings of 74 cents a share on revenue of $2.07 billion.
Data center revenue -- which accounts for the majority of Marvell's sales -- was $1.52 billion, growing 38% from the prior year and coming in just above Wall Street estimates of $1.51 billion.
CEO Matt Murphy said in the earnings release that the company's third-quarter revenue results were, "driven by strong demand for our data center products."
The stock was initially down 5% on the news, though, perhaps because of a muted overall forecast from the company.
Marvell said it expects fourth-quarter adjusted earnings to be 79 cents a share, plus or minus 5 cents. Wall Street has been forecasting 79 cents a share. Revenue for the quarter is expected to be $2.2 billion, plus or minus 5%, compared to analyst estimates of $2.18 billion.
The company also announced that it would be acquiring artificial intelligence start-up Celestial AI for in a cash and stock deal valued at approximately $3.25 billion.
However, shares shot back up after Murphy offered more color on the data center business during the company's earnings call. "We now expect Marvell's data center revenue to grow year over year by more than 25% next fiscal year." That exceeded Wall Street's estimates.
The forecast doesn't include the pending acquisition of Celesitial, Murphy said.
Marvell shares were up 14% in after-hours trading following the call.
Shares of Marvell surged 83% in 2024 as investors bet that customers would spend big on AI hardware. However, the stock has dropped 16% this year as Marvell struggles to convince the market it can win long-term deals amid tough competition.
"Investors continue to see custom ASIC through a digital lens--either you are in or out," UBS analyst Timothy Arcuri wrote in a note on Nov. 23. ASICs -- or application-specific integrated circuits -- are an integrated circuit chip customized for a specific use. Google's Tensor Processing Units, now seen as a potential alternative to Nvidia's chips in some cases, are an example.
"Rather, we believe most customers are moving to diversify their roadmaps and use not only multiple GPU suppliers but also multiple ASIC suppliers," Arcuri added. He rates Marvell as a Buy with a $110 price target.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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December 02, 2025 17:48 ET (22:48 GMT)
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