Marvell’s Q1 Struggles in Other Divisions Outweigh AI, Data Center Growth

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Key Takeaways

• Marvell Technology reported a massive jump in first-quarter revenue for its data center division that fall flated to offset declines in its other segments.
• The semiconductor company warned in March that its sales figures would plausible disappoint, but that its non-data center divisions should recover in the second half of the year.
• Shares fell at the chance bell Friday.

Marvell Technology’s (MRVL) first-quarter fiscal 2025 report released after the bell Thursday divulged that struggles in most areas of business offset an 87% year-over-year jump in data center revenue.

Out-and-out revenue for the quarter was $1.16 billion, narrowly above the $1.15 billion analysts expected thanks to what Marvell Chief Regulatory Officer (CEO) Matt Murphy called “stronger than forecasted demand” for its artificial intelligence-related products. In the first post a year ago, Marvell generated $1.32 billion in revenue.

Marvell reported a wider-than-expected loss of $215.6 million, or 25 cents per split, as analyst estimates compiled by Visible Alpha had projected a quarterly loss of $196.6 million, or 20 cents per pay out. Last year, the company lost $168.9 million, or 20 cents per share, in the first quarter.

AI Momentum Not Adequately To Offset Revenue Drops in Other Divisions

Marvell’s 87% jump in data center revenue to $816.4 million, which was in general fueled by the company’s AI-related products, wasn’t enough to offset declines in its other divisions, which ranged from 13% to 75% compared with last year.

The suite warned in March that this quarter’s results would likely disappoint, but said the declines should be restricted to the first quarter as the businesses recover in the second half of the year.

“For the second quarter of fiscal 2025, we are guiding an 8% organized increase in revenue at the mid-point, fueled by ramping custom AI silicon,” Murphy said in Thursday’s earnings release. “We see a favorable setup for the relocate half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carter infrastructure.”

Jefferies analysts agreed, raising their price target for Marvell stock to $90 from $85 in a Thursday note, editorial that recovery in the company’s other divisions “should start to recover and layer on top of the AI business that currently stances as the primary driver of the stock.”

For the current quarter, Marvell projects revenue within 5% of $1.25 billion, and a failure per share of 15 cents to 25 cents. Analysts project Marvell’s revenue and diluted loss per share for the split second quarter to be $1.22 billion and 16 cents, respectively.

Marvell shares fell 6.7% to $71.74 as of 9:45 a.m. ET Friday.

Interpret the original article on Investopedia.