Amazon's Trainium Chips Gain Favor with Cramer

Jim Cramer initially criticized Amazon.com's use of Trainium chips, but has now changed his mind and praises CEO Andy Jassy's approach of balancing costs with computing. He acknowledges the potential of Amazon.com as an investment but believes some AI stocks hold greater promise for delivering higher returns and have limited downside risk.

Marvell Technology, Inc. (NASDAQ: MRVL) reported its second-quarter (Q2) financial results for fiscal year 2026, with mixed performance that saw shares drop by 11% in after-hours trading. The company's net revenue for Q2 was $2.006 billion, which fell short of expectations but marked a 58% year-over-year increase. The adjusted earnings per share (EPS) of $0.67, which excluded certain expenses, were in line with consensus estimates [1].

Despite the revenue shortfall, the company's gross margin remained strong at 59.4% on a non-GAAP basis, reflecting robust operational efficiency. Cash flow from operations for the quarter was $461.6 million, underscoring the company's financial health. Matt Murphy, Chairman and CEO of Marvell, highlighted the growth driven by strong demand for AI and custom silicon products, as well as a recovery in enterprise networking and carrier infrastructure markets. The company's custom AI design activity reached an all-time high, with over 50 new opportunities across more than 10 customers [1].

Looking ahead, Marvell expects net revenue of $2.060 billion in the third quarter of fiscal 2026, with a GAAP gross margin of 51.5% to 52.0% and a non-GAAP gross margin of 59.5% to 60.0%. The company's adjusted EPS is expected to be $0.74 per share. Despite the near-term uncertainty, TD Cowen analyst Joshua Buchalter reiterated his Buy rating and $90 price target, citing growing demand for AI in data centers and a potential upward trajectory in the January quarter. However, he noted the uncertainty surrounding the company's role in Amazon's Trainium chips [1].

Amazon.com, Inc. (NASDAQ: AMZN) has been a focus of Jim Cramer's attention, who initially criticized the company's use of Trainium chips. However, Cramer has since praised CEO Andy Jassy's approach of balancing costs with computing, acknowledging the potential of Amazon as an investment. Cramer believes that certain AI stocks, such as Marvell, hold greater promise for delivering higher returns and have limited downside risk [2].

Marvell's results highlight the challenges faced by semiconductor companies in a rapidly evolving market, with strong demand for AI and other technologies offset by revenue shortfalls and near-term uncertainties. As the AI landscape continues to evolve, investors will be closely watching Marvell's performance and the potential impact of its involvement with Amazon's Trainium chips.

References:
[1] https://investor.marvell.com/2025-08-28-Marvell-Technology,-Inc-Reports-Second-Quarter-of-Fiscal-Year-2026-Financial-Results
[2] https://finance.yahoo.com/news/jim-cramer-highlights-people-gave-042737578.html