Overview
Since the Report + 0.8%
Revenue grew 37.0% year over year, EPS matched the estimate; the stock fell 7.0% in its first reaction.
- RevenueQ2
- $2.74B
- ▲ 37% YoY · 0.7% Below Estimate
- EPSAdjusted
- $0.94
- Estimate $0.94 · in Line
Verdict
BUYMarvell posted record second-quarter revenue of $2.74 billion, up 37%, data center revenue jumped 46% to 79% of sales, and third-quarter guidance of $3.15 billion landed 3.6% above Wall Street. Yet the stock fell 7% after hours: meaningful revenue from the Google mega-deal was pushed out to fiscal 2029, and a year-to-date rally north of 180% had stretched the valuation. The key thing to watch now is whether the custom-silicon ramp truly accelerates in the second half of the year.
Close on Report DayAug 27
$241.45▼ 7.0%Report-Day Move
- Market Cap(Today)
- ≈ $213 B
- 1Y Return(At Report)
- + 231%
- P/E(At Today's Price · $3.30 · Trailing 12M)
- 73.7
- Net Margin(Trailing 12M)
- 27.9%
Earnings Summary
In 30 Seconds- Revenue rose 37% year over year to $2.74B; data center grew 46% and made up 79% of sales.
- Third-quarter revenue guidance of $3.15B came in 3.6% above the market expectation.
- Shares fell ~7% after hours as Google revenue slipped to fiscal 2029 and valuation stayed stretched.
The Numbers
GAAP EPS
$0.33
Net Income $308M
Data Center Revenue
$2.17B
▲ 46% YoY · 79% of Revenue
Adjusted Gross Margin
58.9%
GAAP 53.1%
Q3 Revenue Guidance
$3.15B
3.6% Above Estimate ▲
Quarterly Revenue ($ Billion)
2.01
Q2 26 · $2.01 B
2.08
Q3 26 · $2.08 B · QoQ + 3.4%
2.22
Q4 26 · $2.22 B · QoQ + 6.9%
2.42
Q1 27 · $2.42 B · QoQ + 9.0%
2.74
Q2 27 · $2.74 B · QoQ + 13.3% · YoY + 36.5%
2.99–3.31
Q3 27E · 2.99–3.31 · QoQ + 15.0% · YoY + 51.8%
- Q2 26
- Q3 26
- Q4 26
- Q1 27
- Q2 27
- Q3 27E
Q3 FY27 Company Guidance
- Revenue2.99 – 3.31 billion2.99 billion3.31 billion
Midpoint $3.15 · Market Expectation $3.043.6% Above Estimate ▲
- Adjusted EPS1.05 – 1.15 $1.05 $1.15 $
Midpoint $1.10 · Market Expectation $1.072.8% Above Estimate ▲
- Adjusted Gross Margin57.5% – 58.5%57.5%58.5%
Q2 Actual 58.9%0.9 pt Contraction ▼
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±5.8% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Data Center$2.17 BShare 79.3%▲ 45.7% YoY
- Communications and Other$568 MShare 20.7%▲ 10.1% YoY
Key Metrics
Operating Cash Flow
$606 M
Press Release
Share Repurchases
$200 M
Press Release
Dividends Paid
$53.9 M
Press Release
Cash and Cash Equivalents
$3.93 B
Press Release
Shares are computed over the segment total: $2.74 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our data center revenue set a record in the second quarter, and the strength is reflected in our third-quarter guidance of $3.15 billion at the midpoint, representing 15% sequential growth and more than 50% year over year. We are seeing a significant acceleration in custom demand in the second half of this year, and we remain confident that this business will more than double year over year in fiscal 2028.”
- Record Data Center Revenue
- Custom Silicon Accelerating in H2
- Google Revenue Pushed to Fiscal 2029
Summary and Review
Summary
Marvell reported $2.74 billion in revenue for the quarter ended August 2, a record, up 37% year over year and 13% sequentially. Data center carried almost all of the growth. Segment revenue rose 46% to $2.17 billion and made up 79% of the total. Adjusted earnings of $0.94 per share were in line with expectations; GAAP earnings were $0.33. Adjusted gross margin landed at 58.9%. Third-quarter revenue guidance is $3.15 billion, about 3.6% above the $3.04 billion consensus.
Despite the above-consensus guidance, the stock fell about 7% after hours, having closed the regular session down 1.5% at $241.45. The main driver was the Google mega-deal announced last week. Management said meaningful revenue from it will land mostly in fiscal 2029. Valuation was the second factor. The stock had surged more than 180% year to date to a June high of $329.88; much of the good news was already priced in. Roughly 6.3% dilution from the warrant added pressure.
The picture is positive: AI demand is strong and data center momentum is accelerating. Custom silicon should ramp in the second half and double in fiscal 2028. Two reservations remain. Third-quarter adjusted gross margin slips 0.9 point, from 58.9% to roughly 58.0%, as lower-margin custom products grow in the mix. And the biggest catalyst, Google revenue, slipped to 2029. Revenue was also a touch below consensus. We score it 79, a buy, with question marks on timing and valuation.
Full Review
Data center is carrying growth on its own.
Data center revenue rose 46% year over year to a record $2.17 billion in the second quarter, making up 79% of total revenue, up from around 74% a year ago. In other words, Marvell is increasingly tied to a single engine. To signal that the strength is durable, management raised its full-year data center growth outlook from 50% to roughly 60%. It expects the segment to grow more than 20% sequentially in the third quarter. That momentum comes from both AI-infrastructure interconnect products and custom-silicon programs. The communications and other segment, by contrast, was just $568 million, or 21% of revenue, with single-digit year-over-year growth. In short, data center is the center of the story, and the company's fortunes are largely tied to that segment's trajectory.
Guidance beat Wall Street, but margin is easing.
The third-quarter outlook was the strongest part of the quarter. The $3.15 billion revenue midpoint is 3.6% above the $3.04 billion consensus, and the $1.10 adjusted EPS guide is 2.8% above the $1.07 estimate. That points to 15% sequential and more than 50% year-over-year growth. But there is a shadow in the same guidance: adjusted gross margin is pulled to a 57.5%–58.5% range, a 58.0% midpoint. That is about a 0.9-point contraction from the 58.9% delivered in the second quarter. The cause is not structural weakness but product mix: as the lower-margin custom-silicon business grows, it drags down the average. The finance team expects next year's margins to run close to the band the company is exiting this year at.
Why the stock fell: Google revenue pushed to 2029.
With results and guidance both beating expectations, the stock's roughly 7% after-hours drop looks contradictory at first; the reason is that expectations about the future were already priced in. Last week Marvell announced a multi-year Google warrant agreement with a scope reaching up to $120 billion, and the stock had jumped 13% on the news. On this quarter's call, management said meaningful revenue from the deal will mostly come online in fiscal 2029. For investors looking for a near-term catalyst, that meant a delay. On top of that, the roughly 6.3% dilution from the warrant and a year-to-date rally north of 180% had raised the bar for reacting to good news. In the end, a strong quarter was met with profit-taking.
The custom-silicon ramp is tied to the second half.
At the heart of Marvell's medium-term story are custom AI chips (XPUs) designed for cloud giants. Management reiterated that it is seeing a significant acceleration in custom demand in the second half of the year. It expects this business to more than double year over year in fiscal 2028. The company also reaffirmed its $10 billion custom XPU revenue target for fiscal 2029. That represents a new layer to be added on top of today's data center revenue. Meaningful revenue from the Google deal also slips to fiscal 2029. But most of the ramp has yet to materialize, and investors want to see it turn into concrete orders and revenue. That makes the next two quarters the critical window in which the story moves from words to numbers.
Valuation is high and the margin for error is thin.
The stock trades at roughly 73 times trailing adjusted earnings and about 47 times forward earnings. Those multiples price in a lot of high growth. At such a valuation, even a beat-and-raise quarter may not be enough to lift the stock — as was the case this time. The company's growth rate justifies the multiples to a degree, but the margin for error is thin. A small miss in guidance or a delay in a customer program can draw a sharp reaction. For investors, the question is balancing belief in Marvell's growth against the price being paid for that growth. Next quarter, watch two lines: whether data center grows more than 20% sequentially, and whether gross margin holds the 58.0% midpoint.
Looking Ahead
Strengths and Risks
6 Strengths · 6 RisksStrengths
6- Record revenue$2.74 billion, up 37% year over year
- Data center revenue up 46% YoY, 79% of the total
- Third-quarter guidance 3.6% above market expectations
- Full-year data center growth target raised from 50% to ~60%
- Strong operating cash flow$606 million
- Custom-silicon business on track to double in fiscal 2028
Risks
6- Meaningful Google deal revenue pushed to fiscal 2029
- High valuation~73x trailing adjusted earnings
- Third-quarter gross margin easing 0.9 point (custom mix)
- Revenue came in 0.7% below market expectations
- About 6.3% share dilution from the warrant
- Revenue concentrated in data center and a few large customers
What to Watch
4- Third-quarter FY2027 earnings (~December 2026)
- Custom-silicon ramp accelerating in the second half
- Whether full-year data center growth reaches ~60%
- $10 billion custom XPU revenue target for fiscal 2029
Upcoming Earnings
To Understand This