Key Takeaways:
Marvell Technology raised its fiscal 2027 revenue outlook to about $12 billion, up roughly 45% year over year, citing strong data center demand.
"The guidance reflects broad-based strength across our data center portfolio," Chief Executive Matt Murphy said on the company's earnings call.
The semiconductor maker reported record fiscal second-quarter revenue of $2.739 billion, up 37% year over year and 13% sequentially, beating the midpoint of guidance. Non-GAAP earnings per share of $0.94 also topped expectations. Data center revenue reached $2.17 billion, up 46% year over year and 18% sequentially, representing 79% of total revenue, driven by optical DSPs, the 1.6T ramp, 51.2T switching and custom silicon. Communications and other revenue totaled $568 million, up 10% year over year. The company now expects the data center business to grow about 60% this fiscal year, up from a prior forecast of roughly 50%.
Marvell also raised its fiscal 2028 revenue outlook to about $18 billion, up roughly 50% year over year, from a prior $16.5 billion. For the fiscal third quarter, the company guided revenue of $3.15 billion, plus or minus 5%, representing 15% sequential growth and more than 50% year-over-year growth, with non-GAAP EPS between $1.05 and $1.15. Non-GAAP gross margin is expected between 57.5% and 58.5%, down from 58.9% in the second quarter as custom silicon ramps. Non-GAAP operating margin expanded to 36.6% in the second quarter, up 180 basis points year over year, and the company expects to enter its 38% to 40% long-term target range in the fiscal fourth quarter.
The raised outlook follows an expanded commercial agreement with Google covering custom programs including AI inference accelerators, storage controllers, NICs and memory interface controllers, with potential revenue of $120 billion over 6.5 years if all milestones are met. The company plans about $1 billion in capacity prepayments to suppliers in fiscal 2027 to secure manufacturing, Chief Financial Officer Dan Durn said.
The guidance puts Marvell on a steeper growth path than peers Broadcom and Nvidia as hyperscalers pour capital into custom AI silicon and optical interconnect. Custom revenue is expected to more than double in fiscal 2028, with scale-up optics and switching among the largest contributors to the raised outlook.
Shares fell 6.59% to $225.55 in after-hours trading following the report. The guidance raise shows management expects AI infrastructure demand to accelerate through fiscal 2028, with custom revenue expected to more than double and data center growth exceeding 60%. Investors will watch Marvell's Investor Day on October 6 for a deeper dive into long-term growth drivers and updated custom revenue targets.
This article is for informational purposes only and does not constitute investment advice.
