Jim Cramer's Bullish Take on Marvell Technology's AI ASICs Amidst FQ2 Earnings Miss

Marvell Technology, Inc. (NASDAQ:MRVL) is a semiconductor designer whose shares have lost 44% YTD. Jim Cramer discussed the company's custom AI chips called ASICs, saying it has a strong potential despite missing analyst estimates in its fiscal Q2 earnings report. Cramer believes the stock has limited downside risk and could potentially double in three years.

Marvell Technology, Inc. (MRVL), a semiconductor designer, has seen its shares decline by 44% year-to-date (YTD). The company's recent fiscal Q2 earnings report, released on August 28, highlighted both promising growth and significant challenges. Despite missing analyst estimates, Marvell's stock has limited downside risk, according to Jim Cramer, who sees potential for the stock to double in three years.

Marvell reported a 58% year-over-year (YoY) increase in revenue to $2.006 billion in the second quarter, slightly exceeding analyst estimates [3]. The company's earnings per share (EPS) reached $0.67, more than doubling the prior-year figure. The data center segment, which generated $1.49 billion in revenue, was a key driver of growth, with a 69% YoY increase. However, Marvell's guidance for the third quarter (Q3) revenue of $2.06 billion, a 5% variance, fell short of the Street's $2.11 billion target [3].

The company's CEO, Matt Murphy, attributed the Q3 revenue guidance to "nonlinear growth" in its custom AI chips business, citing "lumpiness" in demand from cloud providers [3]. This guidance was slightly below the average estimate of $2.11 billion, leading to an 18% drop in Marvell's stock price on Friday [3].

Analysts at Cantor and Bank of America downgraded Marvell's stock to neutral from buy, citing concerns around the pace of major cloud projects and the company's AI growth prospects in the near/medium term [3]. Despite the Q3 revenue guidance, Marvell's strong Q2 performance and AI gains in the data center segment highlight the company's potential for growth in the custom AI chips market. Investors should closely monitor Marvell's pipeline of new customers and the company's ability to adapt to the "lumpiness" of demand from major cloud providers.

Marvell's stock has been volatile, with a significant decline of nearly 17% on Friday following the company's release of a sales forecast that fell short of Wall Street's expectations [3]. The stock's performance was further impacted by its failure to reclaim the 200-day moving average after breaking down below an uptrend line. This move indicates a shift in investor sentiment, with bears gaining control of the longer-term price action [3].

Investors should closely monitor critical support levels on Marvell's chart. The first lower level to watch is around $62, which may provide support near a range of corresponding trading activity stretching back to the December 2023 high. A close below this level could see the shares fall to support near $56, potentially attracting buying interest around last year's January and August troughs. Failure to defend this level could lead to a retest of lower support at $50, near prominent lows formed in December 2023 and April this year [3].

Despite the challenges, Marvell remains committed to capitalizing on the growing AI market. The company recently completed the $2.5 billion sale of its automotive ethernet business to Infineon Technologies, aligning with its strategy to focus on the "massive AI opportunity" [4]. Murphy emphasized that Marvell's design teams are currently engaged with over 50 new opportunities involving more than 10 customers, underscoring the company's aggressive pivot to AI-focused custom silicon [4].

In conclusion, while Marvell Technology, Inc. faces significant challenges in the near term, its strong Q2 performance and long-term potential in the AI market suggest that the stock has limited downside risk. Investors should closely monitor the company's ability to adapt to the "lumpiness" of demand from major cloud providers and its pipeline of new customers.

References:
[1] https://www.nasdaq.com/articles/marvell-technology-q2-earnings-match-estimates-revenues-rise-y-y
[2] https://www.cnbc.com/2025/08/29/marvell-stock-earnings-guidance.html
[3] https://www.ainvest.com/news/marvell-technology-stock-drops-18-6-q3-outlook-disappoints-2508/
[4] https://theoutpost.ai/news-story/marvell-technology-s-stock-tumbles-on-weak-data-center-forecast-raising-ai-investor-concerns-19676/