Market Commentary

Marvell Sinks As Chip Slowdown Continues

Rahul Joshua · 1 minute read

Shares of the chipmaker Marvell (MRVL:US) plunged later in the week following the release of the company’s fourth-quarter earnings report.

Marvell reported an in-line EPS while revenue grew 6.0% year-over-year to $1.42 billion, beating the average analyst estimate of $1.4 billion. This is despite a stronger-than-expected decline in data center sales.

While results were mixed-to-positive for Marvell, especially in a difficult macro environment, shares were especially hit by the weaker-than-expected forecast for the first quarter. Marvell expects to post a profit per share of $0.29 on revenue of $1.3 billion, while analysts were looking for earnings of $0.41 per share on revenue of $1.38 billion.

The adjusted gross margin was reported at 63.5%, down 180 basis points from the year-ago period and lower than the expected 64%.

"While inventory corrections and resulting changes in product mix are impacting our guidance for fiscal first quarter revenue and gross margin, we expect these headwinds to subside later in fiscal 2024, as inventory levels normalize, and Marvell-specific growth drivers accelerate," said Matt Murphy, Marvell's President, and CEO.

Earlier this year, Congressman Ro Khanna was buying Marvell shares while the stock was trading in the mid $30. On the other hand, Congress members; Susie Lee and Ron Estes were selling the chip stock in the closing months of 2022.

Marvell shares are up about 22% year-to-date (YTD). The stock is trading around $44.04 per share on Friday.