Marvell’s AI Push: Why the Numbers Look Good

Marvell Technology has seen its stock jump over 50% in April alone, mostly thanks to big moves in the AI chip market. A big part of that growth comes from Nvidia putting $2 billion into the company and an upgrade from Oppenheimer raising the price target to $170. Marvell also spent $1 billion to buy Celestial AI, which helps them build better AI chips. But why does this matter beyond just one company’s success? The real story is about how AI is changing what companies need from their chips. A few years ago, big tech companies mostly used off-the-shelf GPUs for AI tasks. Now, they’re switching to custom silicon—chips made specifically for their needs. This switch is happening because AI is moving from just training models to actually running them in real time. Custom chips are cheaper to run long-term, sometimes by over 40%, which is why big cloud companies are putting money into them. Marvell is already winning big here, with contracts from all the major cloud providers and plans to make custom silicon a quarter of its data center revenue by 2028.Another big area for Marvell is the networking gear that connects all these AI chips. As companies build massive AI supercomputers, they need better ways to move data between chips fast. Marvell sells high-speed switches and retimers, which fix signal loss in servers. Their latest switches can handle twice as many connections as rivals, and their retimer chips are already top choices for big data centers. Revenue from this part of the business doubled in just a year, and they expect it to double again soon. The cherry on top is Marvell’s partnership with Nvidia. The $2 billion investment from Nvidia isn’t just money—it’s a deal to work together on future AI chips. This means Marvell will design chips that work perfectly with Nvidia’s systems, giving them a huge advantage in the AI market. Analysts are mostly bullish, with 23 out of 27 saying "buy, " but they still see a small downside from the current stock price. Still, with all this momentum, it’s hard to ignore the long-term potential.