We recently compiled a list of the 10 Best Semiconductor Stocks to Buy for the AI Boom. In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against the other semiconductor stocks.
More than two years have passed since the proliferation of the disruptive Artificial Intelligence (AI) megatrend, symbolically marked by the launch of OpenAI’s revolutionary product – ChatGPT. Since then, the AI revolution has accelerated rapidly, with 2023 and 2024 seeing a surge in demand for advanced AI applications across industries. This transformation has driven companies to increasingly rely on robust data centers that can support the computational power required by the intelligent algorithms.
In tandem with the rise of AI, the data center sector has experienced substantial growth. The need for larger, more efficient, and scalable data storage and processing capabilities has created a boom in infrastructure investments. Data centers, which house the powerful servers needed for AI workloads, have become critical enablers of this technology’s expansion. This increase in demand for data center capacity is a key factor that has propelled semiconductor stocks, as these centers rely heavily on cutting-edge semiconductors to deliver the speed, efficiency, and power necessary to process vast amounts of data in real time.
Our Methodology
We shortlisted 35 semiconductor stocks using the holdings of iShares’ Semiconductor ETF. Then we merged these stocks with Insider Monkey’s proprietary hedge fund holdings database and identified the 10 most popular hedge fund semiconductor stocks. 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).
An assembly line in a semiconductor factory, with workers at their stations.
Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology Inc (NASDAQ:MRVL), a leading fabless chip designer, specializes in wired networking and holds the second-largest market share in the segment. The company serves diverse end markets, including data centers, carriers, enterprises, automotive, and consumer sectors, with a portfolio featuring processors, transceivers, switches, and storage controllers.
MRVL is well-positioned to capitalize on the growing data center custom silicon opportunity, with its technology leadership, end-to-end solution capabilities, and strong customer traction. The company’s shares are up +82% in the last year, but there is potential for further upside as management expects its custom silicon revenue to grow significantly, from sub-$1 billion currently to around $8 billion by 2028, targeting a 20% market share of the $40 billion TAM it has identified. MRVL’s diversified product portfolio, including in emerging areas like AECs and interconnect technologies, also positions it for continued strong growth across its business segments.
Marvell Technology Inc (NASDAQ:MRVL)’s management commented on the explosive growth opportunities ahead during the Barclays 22nd Annual Global Technology Conference. Here is what they said:
“And our revenue, if you remember, at AI Day, we had indicated this year, the year — the fiscal year we’re in, we thought we’d get to something $0.5 billion of custom silicon revenue in AI. Now the reality is we’re running well ahead of that. But that just gives you an idea of we’re, call it, $0.5 billion-plus of customer AI revenue this year, and the TAM is $40 billion by calendar ’28, right? And our goal was to get about 20% share of that number. So from, call it, something sub-billion dollars today to about $8 billion in the space of, call it, the next 4-plus years, I think, that’s the goal we are looking for. And these customers are very much a big part of that. The opportunity is very large with each one of them.”
Overall MRVL ranks 8th on our list of the best semiconductor stocks to buy for the AI boom. 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 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.
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.
