Marvell Technology: Don't Buy The A.I. Fumes, Downgrade To Sell

Summary

• We’re downgrading Marvell Technology, Inc. to a sell after the recent stock run-up and promises of the A.I. boom working in the company’s favor.
• While Marvell Technology may “double” A.I.-related sales Y/Y consistent with management’s outlook, we don’t believe this will meaningfully boost top-line growth and believe the stock is now over-priced.
• Marvell Technology's A.I.-related revenue was approximately $200M in FY2023, making up a low-digit percent of total sales.
• We also think the A.I. boom will result in a net loss of connectivity ports for Marvell Technology unless server capex is revised up significantly.
• The stock is up 49% since our March upgrade, outperforming the S&P 500 Index by 41%. We see attractive exit points at current levels and recommend investors sell Marvell Technology, Inc. stock.
• This idea was discussed in more depth with members of my private investing community, Tech Contrarians. Learn More »

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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.