We recently published a list of 10 Buzzing AI Stocks on Latest News and Analyst Ratings. Since Marvell Technology, Inc. (NASDAQ:MRVL) ranks 7th on the list, it deserves a deeper look.
Investors are still digesting the Fed’s aggressive rate cut and charting the path forward. Roger Altman, Evercore founder and senior chairman, said while talking to CNBC in a latest program that the Fed was not “behind the curve” but it went with a higher-than-expected rate cut amid labor market concerns.
Asked if he thinks we are headed toward a soft landing scenario, Altman said yes, as he believes growth is “resilient” and corporate profit outlook is good. Altman said equity markets are headed to have their best year since 1960.
“If the landing is finished and the Fed hits its target, Powell will deserve an A and it would be a pretty miraculous achievement,” Altman said.
While the analyst believes currently it’s a “near perfect” overall environment for the market, he did point to “storm clouds” gathering over the international stage including the expanding crisis in the Middle East, Russia’s war on Ukraine and America’s overall fiscal situation.
For this article we chose 10 trending AI stocks based on latest news and analyst ratings. With each company we have mentioned its 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 74
About a year ago, Brook Dane, Goldman Sachs Asset Management, said while talking to CNBC that the market was missing on the AI potential of Marvell Technology Inc (NASDAQ:MRVL).
“Marvell’s core business is doing connectivity in data centers and one of the key bottlenecks besides using GPUs is this connectivity issue and we think as the big platforms continue to spend on AI they are gonna continue to invest behind Marvell Technology Inc (NASDAQ:MRVL) connectivity solutions.”
MRVL shares have gained about 36% over the past one year.
Wall Street analysts are bullish on Marvell Technology Inc (NASDAQ:MRVL) because the company’s products are used in key products sold by major companies. Its 1.6T optical DSP is used in Nvidia’s (NVDA) Blackwell GPU platform while AI ASICS are used in Amazon’s (AMZN) Trainium 2 AI processor and Google’s (GOOG)(GOOGL) Axion CPU processor.
J.P. Morgan analyst Harlan Sur estimates that Marvell Technology Inc (NASDAQ:MRVL) will ship $575 million and $600 million in AI ASICs this year—well above their earlier estimate of $500 million. By year’s end, they expect Marvell Technology Inc (NASDAQ:MRVL) to hit a quarterly run rate of $300 million, compared to the previous target of $200 million.
In the second quarter, the company’s data center sales skyrocketed 92% year-over-year.
“Even more crucial, the company’s cyclical businesses are now on the upswing, with AI and cyclical tailwinds likely propelling a multi-quarter period of positive EPS revisions into CY25,” Sur noted.
Evercore ISI increased its price target for the stock to $98 from $91 following the results. The firm’s analysts Mark Lipacis and Natalia Winkler said Marvell Technology Inc (NASDAQ:MRVL) is riding two AI growth waves—custom ASICs and Electro-Optics—while its higher-margin Enterprise and Carrier businesses are rebounding from a two-year inventory slump.
Barclays also raised its price target to $85 from $80, maintaining an Overweight rating.
“We still like Marvell Technology Inc (NASDAQ:MRVL) story, with AI product ramps expected to drive further upside through next year, complementing core business growth fueled by accelerating fundamentals outside the data center,” analyst Tom O’Malley said.
O’Malley previously said that the potential Blackwell delays won’t affect the broader semiconductor supply chain and said Marvell is well-positioned to benefit from the launch of Blackwell and the increased demand for high-speed networking. He highlighted that Marvell’s custom ASIC business is expected to see growth, as key customers remain committed to accelerating orders. O’Malley also pointed to Credo’s (CRDO) recent earnings update, which he sees as confirmation that at least one major customer is moving forward with significant orders.
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. 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. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (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, Marvell Technology, Inc. (NASDAQ:MRVL) ranks 7th on Insider Monkey’s list titled 10 Buzzing AI Stocks on Latest News and Analyst Ratings. While we acknowledge the potential of Marvell Technology, Inc. (NASDAQ:MRVL), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.