| | | Marvell forecasts $2B Q2 revenue amid accelerating AI-driven data center momentum and custom silicon growth
May 29, 2025 7:33 PM ET
AI-Generated Earnings Calls Insights
Earnings Call Insights: Marvell Technology, Inc. (MRVL) Q1 2026
Management View- CEO Matt Murphy highlighted record revenue of $1.895 billion for Q1 2026, noting a 4% sequential increase and 63% year-over-year growth, stating, "Data center end market continued to deliver strong growth, driven by robust AI demand." Murphy emphasized ongoing recovery in carrier infrastructure and enterprise networking, and announced a significant stock repurchase of $340 million in Q1, up from $200 million in the prior quarter.
- Murphy detailed the sale of the Automotive Ethernet business to Infineon for $2.5 billion, describing it as an all-cash transaction that "will provide us with additional flexibility in our capital allocation strategy." He also noted the launch of new custom silicon and advanced packaging innovations, including a partnership with NVIDIA for NVLink Fusion technology.
- Murphy reported that Marvell's lead XPU program for a large US hyperscale data center customer "has become a key revenue driver for our custom business" and confirmed securing 3-nanometer wafer and packaging capacity, with production expected to start in calendar 2026. Murphy stated, "We anticipate that our revenue from custom AI XPUs for this customer will continue to grow next year, fiscal 2027 and beyond."
- CFO Willem Meintjes said, "Revenue in the first quarter was $1.895 billion exceeding the midpoint of our guidance, growing 63% year-over-year and 4% sequentially. Data center was our largest end market contributing 76% of total revenue." Meintjes added, "Non-GAAP earnings per diluted share was $0.62 reflecting year-over-year growth of 158%, which is more than double the pace of revenue growth."
Outlook- Marvell is forecasting Q2 2026 revenue of $2 billion at the midpoint of guidance, with Murphy stating, "This represents 57% year-over-year growth and would set another record revenue level for Marvell."
- Meintjes provided detailed guidance: "We expect our GAAP gross margin to be between 50% and 51%. We expect our non-GAAP gross margin to be between 59% and 60%." Additionally, "We anticipate GAAP earnings per diluted share in the range of $0.16 to $0.26. We expect non-GAAP earnings per diluted share in the range of $0.62 to $0.72."
- Management expects continued sequential growth in data center revenue and mid-single-digit percentage sequential growth in enterprise networking and carrier infrastructure.
Financial Results- Record Q1 revenue of $1.895 billion, a 4% increase sequentially and 63% year-over-year.
- Data center revenue reached $1.44 billion, growing 5% sequentially and 76% year-over-year, comprising 76% of total revenue.
- GAAP gross margin was 50.3% and non-GAAP gross margin was 59.8%. Non-GAAP operating margin was 34.2%.
- GAAP earnings per diluted share was $0.20; non-GAAP earnings per diluted share was $0.62.
- Cash flow from operations was $333 million. Inventory stood at $1.07 billion, up $42 million from the prior quarter. Shareholder returns included $52 million in dividends and $340 million in stock repurchases.
- Total debt was $4.2 billion, with a gross debt to EBITDA ratio of 1.8 times.
Q&A- Vivek Arya, Bank of America, asked about content direction and exclusivity for next-generation 3-nanometer XPUs. Murphy stated, "We're the incumbent shipping the current generation of this AI XPU...we have secured 3-nanometer wafer and advanced packaging capacity, and that's for 2026 where we expect to start production." Murphy noted, "It's certainly possible and likely that customers...may be pursuing multiple paths to meet their requirements."
- Ross Seymore, Deutsche Bank, questioned Marvell's ability to support a broader customer base. Murphy responded, "We absolutely have the capacity engineering-wise to expand our portfolio and expand our engagements."
- Tore Svanberg, Stifel, asked about Marvell's SerDes technology and the NVIDIA partnership. Murphy explained, "Our SerDes technology remains best-in-class, both from a performance standpoint, as well as a time-to-market standpoint." On NVIDIA, Murphy said, "It's a sign that it demonstrates how...we're deeply engaged in the ecosystem, Tore, with key partners."
- Timothy Arcuri, UBS, inquired about the breakdown of data center revenue and AI growth. Murphy replied, "AI had crossed and was now the majority of our data center revenue...we see a path here in the not-too-distant future where AI...becomes the majority of HoldCo."
- Several analysts questioned the sustainability of custom silicon growth, gross margins, and optical business momentum. Murphy and Meintjes reiterated expectations for continued growth and outlined the impact of custom business mix on margin dynamics.
Sentiment Analysis- Analysts voiced recurring concerns about customer concentration, exclusivity, and the sustainability of gross margins, with a slightly skeptical tone as seen in questions about competitive dynamics and content direction.
- Management maintained a confident tone during prepared remarks and the Q&A, frequently reaffirming growth drivers and providing clarity on supply chain and competitive positioning. Murphy used phrases such as "We are extremely well positioned" and "We feel very confident and very good about our revenue continuity."
- Compared to the previous quarter, analyst skepticism about customer concentration and competitive risks persisted, while management’s tone remained confident, focusing on execution and visibility.
Quarter-over-Quarter Comparison- Q1 2026 revenue rose from $1.817 billion in Q4 2025 to $1.895 billion in Q1 2026, with data center revenue increasing from $1.37 billion to $1.44 billion.
- Non-GAAP EPS increased from $0.60 to $0.62, and non-GAAP operating margin expanded from 33.7% to 34.2%.
- Stock repurchases accelerated from $200 million to $340 million.
- Guidance language shifted to emphasize a $2 billion Q2 revenue target, compared to the previous quarter’s forecast of $1.875 billion for Q1.
- Management continued to signal confidence in custom silicon growth and highlighted new partnerships and product innovations.
- Analysts remained focused on the risk of dual sourcing, gross margin impacts from custom business, and the sustainability of AI-driven revenue growth.
Risks and Concerns- Murphy acknowledged ongoing macroeconomic uncertainties and the potential for customers to pursue multiple sourcing strategies.
- Management addressed questions about gross margin volatility due to the custom business mix and highlighted monitoring of broader market conditions.
- Analysts repeatedly raised concerns about competitive dynamics, customer exclusivity, and the pace of AI-related growth.
Final Takeaway
Marvell Technology began fiscal 2026 with record quarterly revenue and expanding profitability, driven by robust demand for AI in data centers and continued recovery across enterprise and carrier markets. Management highlighted significant milestones in custom silicon programs, ongoing innovation in advanced packaging, and a major divestiture to enhance capital flexibility. The company forecasts another record quarter ahead, with a clear focus on scaling its custom AI silicon and interconnect solutions, while navigating competitive and macroeconomic challenges in pursuit of sustained long-term growth.
Read the full Earnings Call Transcript |
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