1. Marvell Technology, Inc. (NASDAQ:MRVL)
Average Upside Potential: ~92.3%
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) offers data infrastructure semiconductor solutions, spanning the data center core to the network edge. Fitch Ratings believes that the hyperscaler demand for DC products, mainly AI infrastructure, is expected to fuel healthy revenue growth for the company over the medium term despite mixed demand in non-DC end markets. The spending by hyperscalers on AI infrastructure is expected to remain strong with Marvell Technology, Inc. (NASDAQ:MRVL)’s differentiated product platforms fueling share gains.
Design win momentum, strengthened by Marvell Technology, Inc. (NASDAQ:MRVL)’s significant expansion of its relationship with AWS, affirms the strength of the company’s unified DC interconnect, switching, and compute portfolio, and can drive revenue growth, says Fitch Ratings. Notably, structural profit margin expansion cements the company’s FCF profile. Elsewhere, analyst Vivek Arya of Bank of America Securities maintained a “Buy” rating on the company’s stock, maintaining a price objective of $120.00. The rating is backed by factors demonstrating Marvell Technology, Inc. (NASDAQ:MRVL)’s healthy position in the AI and data center markets.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Among our top Q4 contributors were Atlassian, Spotify and Marvell Technology, Inc. (NASDAQ:MRVL). Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. The company delivered strong earnings results, driven by the company’s product lines (e.g., custom silicon, optical connectivity and switching) leveraged to AI data center growth. We believe this could be a significant opportunity for the company as it helps design and manufacture cost-effective custom data center chips that would help reduce cloud providers’ reliance on expensive GPUs. Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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