MRVL earnings preview: data center strength battles segment challenges

Marvell Technology, Inc. (MRVL) is poised to unveil its Q4 earnings today, with projections indicating flat EPS and revenue compared to the previous year. The company typically discloses guidance for the next quarter in its press release, with reports expected shortly after the market close.

MRVL anticipates a Q4 non-GAAP gross margin of 63.5-64.5%, propelled by a robust product mix and ongoing cost optimization efforts. Notably, the Data Center segment, constituting 39% of OctQ sales, witnessed a 1.1% yr/yr revenue dip but a 21% sequential upsurge to $555.8 million. Q4 forecasts foresee mid-30% sequential revenue growth in this segment.

In contrast, the Carrier Infrastructure segment (22% of revenues) experienced a notable 17% yr/yr revenue uptick in Q3, driven primarily by wireless, while wired continued to decline. However, this segment is expected to decelerate in Q4 as the initial 5G rollout wave nears completion.

The Enterprise Networking segment (19% of revenues) encountered a 28% yr/yr revenue decline and Consumer segment forecasts a mid-teen sequential decline in Q4. Similarly, the Automotive/Industrial segment anticipates a 20% sequential revenue decline due to aerospace/defense order fluctuations.

Q1 guidance may appear subdued, with MRVL predicting demand softness affecting EN and CI revenues, though they're expected to rebound over time. Consumer revenues are also forecasted to decline significantly due to seasonal factors in Q1. Conversely, the rapid growth in DC revenue underscores MRVL's role in accelerated computing and AI programs.

Marvell Technology, a fabless chip designer focused on wired networking, boasts a substantial market share. With a market cap of $70.37 billion and an enterprise value of $74.07 billion, MRVL trades at a forward P/E ratio of 40.49.

Marvell's Q4 earnings spotlight the robust Data Center segment performance amidst challenges in other sectors. Investors await Q1 guidance for insights into the company's near-term trajectory, buoyed by MRVL's strong presence in the data center market and its evolving role in accelerated computing and AI.