On Friday, August 30, Marvell Technology stock price soared by more than 9% after the data processing units' and infrastructure processors' producing firm reported quarterly profits and sales nearly in line with expectations, but its EPS (equity per share) for the next quarter has been re-estimated for a higher range of $0.35 to $0.45 on revenue of $1.45 billion. The forecast is now changed for the better vs the company's previous estimates for the median line for Q3 EPS at $0.38 cents on revenue of $1.41 billion. In particular, the data centre end segment reported a record high performance at $881 million of total sales.

As a result, Marvell CEOs projected an AI-related part of their sales target at $1.5 billion in the fiscal year of 2025, with its further potential growth to $2.5 billion in 2026. "Robust trends" in electro-optics and the so-called "custom ASICs" (Application-Specific Integrated Circuits) which are designed to combine various circuits on one chip for some specific overall task), as well as the fact of reducing inventories by 20% YoY, contributed to the overall optimism. Innovative chip technologies allowed Marvell to nearly double its data centre business (+92%) within one year to offset cyclical weakness in its other end markets like enterprise networking, carrier infrastructure and automotive segments. Therefore, the company's previously announced goal of capturing 20% of the AI market share in its total addressable market of $40 billion by the end of 2028 is going ahead of schedule.

Of course, the Wall Street community could not dislike the fast progress. For example, Stifel wealth management group established its new price target at $95 (almost 25% above the current price levels), while keeping a Buy rating for Marvell. Piper Sandler issued an Overweight rating on Marvell with a price target at $100. Rosenblatt Securities, a reputable research and investment banking boutique for institutional brokerage services, recently announced its new price target of $120 per one share of Marvell, which is 57% higher than $76.24 at closing price before the weekend, citing its $3.50 estimate for the company's EPS in 2027.

Even the most sceptical group of Morgan Stanley analysts put their price target somewhat higher to $82 (+7.5%) and noted the initial price jump was probably "justified", as "every business has turned the corner" and the company's management "seems very bullish". As for our humble opinion, we believe that prices are very likely to touch $95 at least, given the all-time high at $93.85 in December 2021 and the recent peaks above $85 in early March this year. Anything above $100 would be a bonus game, not guaranteed, but quite possible.