Marvell shares surge as strong data center revenue drives topline beat By Investing.com

“We saw strong growth from our electro-optics products and our custom AI programs began to ramp,” the company said, adding that it expected see some of its end markets return to growth. “Next quarter, we expect our combined enterprise networking and carrier end markets to return to growth.”

Looking ahead to Q3, EPS was guided in a range of $0.35 to $0.45 on revenue of $1.45B, give or take 3%. That compared with estimates for EPS of $0.38 cents on revenue of $1.41 billion.

In a post-earnings note, analysts at Morgan Stanley raised their price target on MRVL stock from $77 to $82, while maintaining an Equal Weight rating.

“Marvell revenue momentum has come back in a meaningful way, amid strength in AI and a recovery in broad businesses – not entirely unexpected, but well above our estimates,” they wrote.

Despite having some concerns about valuation, analysts note the premarket stock reaction “seems justified, as nearly every business has turned the corner, management seems very bullish, and there is significant operating leverage as revenue growth persists.

“We still struggle with valuation vs. other AI peers, especially NVDA and AVGO, given the large premium on stock comp inclusive #s, but the stock always trades rich and our sense is that enthusiasm will return,” they added.

Separately, Barclays analysts said they expect another quarter of high-teens data center growth in the upcoming fiscal Q4, with double-digit sequential growth expected from Carrier and Enterprise segments, along with strong contributions from Consumer and Industrial/Automotive sectors.

“We continue to like the story here as AI product ramps should drive further upside through the end of next year, layering on to core business growth driven by accelerating fundamentals in the non-DC segments,” Barclays’s note states.

Yasin Ebrahim contributed to this report.