We recently compiled a list of the 10 Most Oversold Data Center Stocks to Buy According to Analysts. In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against the other oversold data center stocks.
In an AI-driven world, data centers have become more critical than ever. While many people have heard of data centers, few fully understand what they entail. Simply put, a data center is a physical facility that houses an organization’s digital infrastructure, including servers, storage systems, and networking equipment. These facilities provide the computing power necessary for IT systems to function, serving as the backbone of modern digital infrastructure. They are essential to powering cloud computing, AI applications, and enterprise IT services.
With the rapid expansion of AI and high-performance computing, data centers have experienced exponential growth, a trend expected to continue for years. According to a February 5 report by the Dell’Oro Group, global annual data center capital expenditure (capex) is projected to exceed $1 trillion by 2029. Despite ongoing concerns about high power consumption, investment in AI infrastructure remains on a strong upward trajectory. Baron Fung, Senior Research Director at Dell’Oro Group, emphasizes this point:
“While AI spending has yet to yield the expected returns and efficiency improvements, long-term growth remains assured, driven by hyperscalers’ multi-year capex cycles and government initiatives such as the $500 billion Stargate Project. Although recent advancements in AI model training efficiency from DeepSeek have been disruptive, efforts to enhance efficiency and reduce the total cost of ownership in AI data centers have been underway for some time. Key areas of focus include advancements in accelerated computing through GPUs and custom accelerators, large language model (LLM) optimizations, and next-generation rack-scale and network infrastructure—all essential for enabling sustainable growth from both cost and power perspectives.”
A key challenge facing the industry was highlighted in KPMG’s “Data Center Supply Chain” report published in November 2024. The report warns of the sector’s heavy reliance on a small group of suppliers and contractors, which, despite improvements in procurement and operations, poses risks to capacity expansion, costs, innovation, and resilience—especially as demand accelerates. KPMG cautions that failure to address these vulnerabilities could destabilize the ecosystem. To mitigate these risks, the report recommends diversifying the supply chain by encouraging new market entrants and reducing dependence on a handful of general, mechanical, and electrical subcontractors.
In summary, while the data center industry is fundamental to technological progress, it is still evolving and adapting to shifting economic and demand dynamics. There is enough scope for more players to offer new and innovative solutions to support the technological advancements. The surging demand for data center facilities has attracted substantial investments from private equity and infrastructure funds, reinforcing expectations of resilient long-term growth. As a result, the data center sector remains a highly attractive space for investors.
Our Methodology
To determine the 10 most year-to-date (YTD) oversold data center stocks to Buy, we conducted in-depth research to compile a list of U.S.-listed data center companies. Our process involved analyzing relevant exchange-traded funds (ETFs), research reports, and proprietary databases to identify key industry players. We then calculated YTD returns for all identified companies and shortlisted the 10 worst-performing stocks. These were then ranked based on their potential upside, with the highest-upside stock at the top. Additionally, we also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: All pricing data is as of market close on February 24.
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)
YTD returns: -11%
Potential Upside: 33%
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) is a leading provider of semiconductor solutions for data infrastructure, serving diverse end markets, including data centers, enterprise networking, carrier infrastructure, consumer applications, and the automotive and industrial sectors. Its product lineup features custom Application-Specific Integrated Circuits (ASICs), electro-optics, Ethernet solutions, Fibre Channel adapters, processors, and storage controllers.
Marvell Technology, Inc. (NASDAQ:MRVL) has been experiencing strong growth, fueled by rising demand for data infrastructure solutions, the rapid adoption of AI and machine learning, and the continued expansion of cloud computing. In Q3, the company’s data center revenue surged 98% YoY and 25% sequentially, with management projecting more than 20% sequential growth for Q4. Following the company’s robust Q3 2025 earnings, Chairman and CEO Matt Murphy attributed its strong performance to the full-scale production of custom AI silicon programs, as well as sustained demand for its advanced interconnect products from cloud customers. Marvell estimates that the total addressable market for accelerated computing in data centers will reach $202 billion by 2028, expanding at a 24% compound annual growth rate (CAGR) from 2023.
Despite its growth trajectory, Marvell Technology, Inc. (NASDAQ:MRVL) shares have declined 11% year-to-date due to broader semiconductor market volatility, underperforming the benchmark SOX Index, which has gained 0.5% over the same period. This decline follows an impressive 83% rally in 2024. Analysts remain optimistic about the stock, with 90% assigning a Buy rating and an average potential upside of 33%. On February 23, Oppenheimer analyst Rick Schafer reaffirmed his Buy rating, maintaining a price target of $125.
Overall MRVL ranks 7th on our list of the most oversold data center stocks according to analysts. While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
