Shares of Marvell Technology tumbled 7.9% in pre-open trading after the chipmaker released its fiscal second-quarter results following Thursday's close. The report contained several positive data points - revenue and earnings beat estimates and management raised multi-year revenue targets - but investors reacted negatively to what they saw as underwhelming long-term guidance and a softer near-term margin forecast.
The company reported Q2 FY2027 revenue of $2.739 billion, a 37% increase from the year-ago quarter, and non-GAAP earnings per share of $0.94. Management lifted its FY2027 full-year revenue outlook to approximately $12 billion and set a FY2028 target of approximately $18 billion.
Despite the revenue beat and the higher multi-year targets, Marvell stopped short of boosting its long-term revenue trajectory in a way that satisfied investors. The company has signed a major new AI chip agreement with Google, but management did not provide a meaningful increase to the long-term revenue outlook tied to that deal. Investors had been hoping to see evidence the Google agreement would accelerate growth sooner, and the absence of clearer upside contributed to the market's negative response.
Another factor weighing on sentiment was the guidance for non-GAAP gross margins in the coming quarter. Management projected gross margins in a range of 57.5% to 58.5%, which implies a sequential decline of roughly 90 basis points. Company commentary tied the margin pressure to a growing mix of custom AI silicon, which carries lower margins than the company’s standard products, reducing near-term profitability.
Data center revenue remained a bright spot. Marvell reported record data center sales of $2.17 billion in Q2, up 46% year-over-year. Management expects data center revenue to grow approximately 75% year-over-year in Q3, underscoring strong demand but also highlighting the elevated expectations already priced into the stock.
The broader market offered limited support for Marvell on the news. The NASDAQ slipped 0.4% while the S&P 500 was essentially flat, indicating a cautious tone across growth and technology names. Key semiconductor peers such as Broadcom and Micron were also navigating a more measured environment after the sector's sharp run-up, which likely reinforced investor caution toward names like Marvell.
Summary: Marvell beat quarterly revenue and EPS estimates and raised its full-year and next-year revenue targets, but shares fell as investors focused on a modest long-term outlook and a near-term gross margin decline driven by a higher mix of lower-margin custom AI silicon. Record data center revenue and strong expected quarter-over-quarter growth underline demand strength while also reflecting elevated market expectations.