Marvell's AI Ambitions Boosted by Citi Price Target Hike

Marvell Technology Inc (MRVL) has received a significant vote of confidence from Citi analysts, who raised the company's price target following its CES presentation. The price target was bumped up by $24 to $136, reflecting Citi's optimism about Marvell's AI and accelerated computing prospects. This article explores the reasons behind Citi's bullish stance and the potential implications for Marvell's stock.

Marvell's CES presentation showcased the company's advanced Ethernet switching and high-bandwidth electrical cables and optical modules, powered by its PAM4 DSPs. However, the real driver behind Citi's price target hike is Marvell's strong AI and custom ASIC market positioning.

1. Sustained AI Sales Growth: Marvell's AI revenue is projected to grow into 2025 and 2026, with expectations of reaching $8 billion by 2028. Key contributors to this growth include increased production by Microsoft (Customer C) in late 2026 and continued growth from AWS. This robust AI revenue growth trajectory has caught Citi's attention and contributed to the price target hike.
2. Expanding Custom ASIC Market: Marvell estimates its custom ASIC total addressable market (TAM) to be $43 billion, which analysts consider conservative. An update on this market is expected in mid-2024, supported by higher cloud spending, rising attach rates, and new customer engagements. This expanding market presents significant opportunities for Marvell to grow its custom ASIC business, further bolstering Citi's bullish stance.

Marvell's AI and custom ASIC market positioning has not gone unnoticed by other analysts and investors. JPMorgan analysts, for instance, have highlighted the strong demand setup for Nvidia (NVDA) in 2025, as it brings to market its Blackwell platform. Similarly, Synopsys' AI and accelerated compute-leading chip and system design remain strong, with a multi-year tailwind. These observations suggest that Marvell's AI revenue growth trajectory is in line with, or even ahead of, other leading semiconductor companies in the AI space.

In conclusion, Marvell's AI ambitions and strong custom ASIC market positioning have caught the eye of Citi analysts, leading to a significant price target hike. As Marvell continues to execute on its AI and custom ASIC growth strategies, investors may want to keep a close eye on the company's progress. However, it is essential to remain cautious and conduct thorough research before making any investment decisions.