Marvell Technology's Undervalued AI Networking Exposure: A Buy Case in a High-Growth Sector

In the rapidly evolving landscape of artificial intelligence, Marvell Technology (NASDAQ:MRVL) has emerged as a critical enabler of next-generation infrastructure. With data center revenue surging 69% year-over-year in Q2 FY2026 to $1.49 billion [1], the company is capitalizing on its strategic positioning in AI networking and custom silicon development. Despite near-term margin pressures and a recent price target cut by Susquehanna, Marvell’s long-term growth trajectory remains compelling, particularly as hyperscalers like Amazon and Microsoft scale their AI operations.

Strategic Sector Positioning: A Cornerstone of AI Infrastructure

Marvell’s dominance in AI infrastructure is underscored by its partnerships with major hyperscalers and its leadership in cutting-edge technologies such as Co-Packaged Optics (CPO) and Low-Power Optics (LPO). These innovations reduce latency and increase bandwidth, addressing critical bottlenecks in AI cluster performance [4]. According to a report by Futurum Group, Marvell’s custom AI silicon and interconnect solutions are now in high-volume production, with multi-year contracts securing its role in the AI ecosystem [4].

The company’s AI-related revenue is projected to more than double by FY2026, driven by a TAM expansion from $94 billion by 2028 and a target to increase its data center market share from 13% in 2024 to 20% by 2028 [1]. This growth is further supported by Marvell’s R&D investments, which reached $1.95 billion in FY2025, funding breakthroughs like 2nm custom SRAM and Ultra Accelerator Link (UALink) interconnect technology [2].

Earnings Momentum and Analyst Sentiment: A Mixed but Optimistic Outlook

While Susquehanna recently reduced its price target for Marvell to $90 from $110, citing concerns over T2 volume deployment variability and XPUs/Inphi delays [1], the firm maintains a Positive rating. This aligns with broader analyst sentiment: 33 analysts have assigned an average price target of $88.41, with 26 recommending a Buy and none a Sell [1]. JPMorgan and Stifel, for instance, retain Overweight and Buy ratings, with price targets of $130 and $80, respectively [1].

Marvell’s earnings momentum is undeniable. Q2 FY2026 revenue of $2.006 billion exceeded expectations, with data center revenue accounting for 74% of total sales [3]. For Q3 FY2026, the company guided to $2.06 billion in revenue, surpassing the $2.01 billion consensus [3]. These results highlight Marvell’s ability to scale amid competitive pressures from Broadcom and NVIDIA [1].

Addressing Near-Term Headwinds: A Temporary Detractor

Susquehanna’s revised outlook reflects near-term challenges, including mixed data center and carrier sales and margin pressures from custom silicon ramp-ups [2]. However, these issues are largely tied to execution timelines and industry-wide scaling hurdles. Marvell’s long-term fundamentals remain intact, with AI infrastructure demand projected to grow from $21 billion in 2023 to $75 billion by 2028 [2]. The company’s recent webinar on custom AI ASICs—expected to generate $4 billion in revenue this year—further underscores its ability to monetize this expansion [1].

Conclusion: A Buy Case in a High-Growth Sector

Marvell’s undervalued AI networking exposure presents a compelling opportunity for investors. While near-term volatility is inevitable in a capital-intensive sector, the company’s technological leadership, earnings momentum, and strategic partnerships with hyperscalers position it to capture significant value as AI infrastructure demand accelerates. With a current price below the average analyst target of $88.41 and a long-term TAM expansion underway, Marvell offers a rare combination of near-term execution and long-term growth potential.

**Source:[1] Marvell Q2 FY 2026 Results: Healthy Data Center Growth [https://futurumgroup.com/insights/marvell-q2-fy-2026-earnings-data-center-growth-healthy-but-overshadowed-by-rising-competition][2] Marvell Technology AI Infrastructure Growth & Financial Analysis [https://monexa.ai/blog/marvell-technology-inc-market-analysis-ai-infrastr-MRVL-2025-07-08][3] Earnings call transcript: Marvell Technology Q2 2026 [https://www.investing.com/news/transcripts/earnings-call-transcript-marvell-technology-q2-2026-results-show-strong-growth-93CH-4215715][4] Marvell Q4 FY2025 Earnings: AI Chips Drive Revenue [https://futurumgroup.com/insights/marvell-q4-fy-2025-reports-27-revenue-growth-ai-custom-chips-drive-momentum/]