We recently published a list of 10 Stocks with Potential to Explode in 2025. In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against other stocks with potential to explode in 2025.
The recent pullback in US equities can be a sign of an aging bull market and a reaction to developments happening around trade policy, as per Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company. Corrections and volatility are the factors investors need to consider to capture any sort of long-term market returns. The current volatility has got many investors worried regarding the prospects of losing their gains.
Pullbacks Are Part and Parcel
As of March 11, the S&P 500 Index declined 9.3% from its all-time closing high it touched in mid-February, says Timmer. According to him, the market has seen a decline of 5% or more in 93% of calendar years since the year 1980, and it has suffered a 10% or more drop in 47% over the same calendar years. Yet, its average calendar-year return over a similar period has been ~13.3%. This means that pullbacks are quite common in the equity markets. The broader market has seen recovery from every one of those periods and has delivered healthy long-term returns.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Expert’s Views on Current Market Dynamics
Timmer opines that bull markets generally take place when there are expectations that the news can’t get any worse. The markets are forward-looking, meaning that stocks always showcase the expectations regarding the future. Even if the current news is not favorable, if investors think that tomorrow’s news will be less bad, the prices might start to increase. In this stage, the market continues to increase despite a decline in profits or earnings. This reflects that the higher P/E ratios have been fueling the market. After 2 – 4 quarters, the profits start to show up. Now, as the bull market matures, earnings growth tends to take charge, with the PE ratios beginning to decline.
As per Timmer, the market investors are in this environment. The earnings growth remains in the double digits, but since investors are getting into the later innings of the bull market, the P/E ratios have now been stretched. The broader market is slightly more prone to fluctuations or volatility. Apart from these trends, the market continues to process the impact of current trade policy shifts. Overall, Timmer said that across all different cycles, booms, crises, and busts, the markets eventually recovered and touched new all-time highs.
Our Methodology
To list the 10 Stocks with Potential to Explode in 2025, we sifted through several online rankings to shortlist the stocks that analysts see significant upside to, as of March 18. Next, we mentioned hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An assembly line in a semiconductor factory, with workers at their stations.
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.”
Overall, MRVL ranks 1st on our list of stocks with potential to explode in 2025. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
