Marvell stock price has pulled back from its weekly highs as investors adjusted to the recent deal with Google on custom chips. MRVL dropped to $235, a few points below this week’s high of $252. It remains in a local bear market after dropping by nearly 30% from its highest point this year, with its upcoming earnings on August 27 being the next big catalyst.
Marvell Technology to publish earnings after the Google deal
MRVL, an Nvidia-backed company, will be in the spotlight next week as it releases its earnings report. This report will come a week after the company inked a $12 billion deal with Alphabet. As part of this deal, the company will develop Google’s AI chips, with the latter having an option to buy shares in Marvell worth over $12.2 billion.
This is an important aspect since Marvell already develops Google’s TPUs. It also develops chips for other companies like Amazon and Microsoft, which are also intensifying their market share in the ASIC industry. Google is now selling these TPU chips to other companies.
Experts, including Nvidia’s Jensen Huang, are highly optimistic about Marvell Technology. In a statement earlier this year, Huang maintained that the company would attain a $1 trillion market capitalization over time. Nvidia then took a $2 billion stake in Marvell as part of this investment, with the two companies planning to work together on silicon photonics.
Analysts see Marvell’s growth continuing
Yahoo Finance data shows that analysts expect that Marvell’s growth will accelerate in the coming years. The average estimate among analysts is that its revenue jumped by 35% in the last quarter to $2.7 billion. For the year, the revenue estimate is $11.5 billion, a 40% annual increase. After that, analysts see the company’s revenue growing by 45% to $16.7 billion.
Marvell’s profitability is also expected to keep growing in the foreseeable future. It made a GAAP earnings-per-share of $2.84 last year, and analysts expect that it will grow to $4.05 this year and $6.25 next year. This growth will partly be because of its recent acquisition of Celestial AI, a company that focuses on photonics technology that helps to connect AI chips within huge clusters.
Many analysts following the company have a bullish outlook, while admitting that its valuation is an issue. For example, Roth Capital’s Suji Desilva reiterated his bullish outlook, placing a $350 price target. Blayne Curtis, a BMO analyst, hiked the target to $325, while RBC has a target of $360.
Marvell stock price technical analysis
The daily chart shows that the MRVL stock price has rebounded in the past few weeks, moving from a low of $162.93 in July to a high of $252 this week. It then retreated to $235 as chip stocks pulled back.
The stock has remained above the 50-day Exponential Moving Average (EMA). It also remains slightly above the 38.2% Fibonacci Retracement level.
Marvell Technology stock has also remained above the Supertrend indicator, which is a bullish sign in technical analysis. These technicals suggest that the stock will rebound, potentially to the psychological level of $300. The risk, however, is that it has formed a small bearish engulfing pattern, which may lead to more weakness.