Why Marvell Technology’s AI Infrastructure Play is a Buy Now

The AI revolution is not just about algorithms—it’s about hardware. And in the race to power the next generation of generative AI systems, Marvell Technology (MRVL) is emerging as a critical enabler of the infrastructure that will fuel this boom. With its strategic focus on high-performance storage, compute, and networking silicon for data centers, MRVL is positioned to capitalize on a $2 trillion AI infrastructure CAPEX wave. Yet its stock trades at a valuation discount that ignores these tailwinds. Here’s why investors should act now.

The Semiconductor Edge in AI Hardware

The demand for generative AI—from training massive models to scaling inference at the edge—has created an insatiable hunger for specialized hardware. Unlike general-purpose chips, AI infrastructure requires custom silicon optimized for high-speed data movement, low-latency processing, and energy efficiency. Marvell’s 2nm silicon platforms, silicon photonics, and 3D chiplet stacking innovations are not just incremental upgrades—they’re game-changers.

Take their 3D simultaneous bi-directional I/O technology, operating at 6.4 Gbits/second. This breakthrough doubles bandwidth or reduces interconnects by 50%, enabling taller chiplet stacks that rival the performance of monolithic chips. Combined with CXL-based memory pooling and high-bandwidth memory (HBM) architectures, Marvell’s solutions are purpose-built for hyperscalers like Amazon and Microsoft, which are racing to deploy AI at scale.

Design Wins Fueling an Earnings Inflection

Marvell’s strategic partnerships are already paying off. In 2024, it secured eightfold growth in its design funnel since launching its custom silicon business in 2019. Key wins include:
- AWS Trainium 3: Custom AI chips now in mass production.
- Microsoft Maia Gen 2: Ramping in 2026 with 25% more silicon space for logic functions.
- A third unnamed hyperscaler engagement targeting 2026 production.

These deals are driving revenue surges. In Q4 2025, data center revenue jumped 78% YoY to $1.4 billion, accounting for 75% of total sales. AI alone now contributes over half of data center revenue, and 2025 AI revenue is projected to hit $4 billion, exceeding initial targets.

Underappreciated Catalysts: Enterprise AI Adoption

While the spotlight is on cloud giants, Marvell’s enterprise networking and carrier infrastructure segments are also recovering. Sequential growth of 18% and 10% is expected in Q1 2026, balancing out cyclical pressures in consumer markets. This diversification reduces risk while amplifying upside as enterprises invest in AI-driven workloads—from healthcare diagnostics to industrial automation.

Moreover, the company’s Co-Packaged Optics (CPO) technology—launching in 2025—could be a sleeper hit. By enabling 100X longer reach for AI server clusters, CPO eliminates copper interconnects’ latency and power inefficiencies. With forecasts predicting CPO ports to grow from <50,000 to >18 million by 2029, Marvell is set to profit as hyperscalers scale AI infrastructure.

Valuation: A Discounted Leader

Despite its growth trajectory, MRVL’s stock trades at a P/E ratio of 12x—a significant discount to peers like Broadcom (AVGO) (P/E 23x) and NVIDIA (NVDA) (P/E 45x). This undervaluation overlooks two critical factors:
1. Margin Stability: While custom AI chips carry lower gross margins than merchant products, CEO Matt Murphy emphasizes that operating margins will remain stable due to economies of scale.
2. Addressable Market Expansion: The TAM for accelerated compute is projected to grow 45% annually, reaching $75 billion by 2028. Marvell aims to double its market share in this segment.

Why Act Now?

The AI hardware boom isn’t a fad—it’s a foundational shift. Marvell’s 2nm roadmap, hyperscaler partnerships, and $2.5 billion AI revenue target for 2026 position it to outperform. With Q1 2026 revenue guidance at $1.875 billion (+62% YoY), the earnings inflection is already here.

Investors should ignore short-term noise (e.g., cyclical dips in consumer segments) and focus on the long game. The stock’s current discount offers a rare entry point into a company that’s literally building the backbone of AI infrastructure.

Final Call to Action

The AI revolution won’t be powered by software alone. It requires hardware leadership, and Marvell is delivering. With a strong balance sheet, a diversified pipeline, and a $2 trillion CAPEX tailwind, MRVL is a buy now. The next earnings report in late 2025 could be a catalyst—don’t wait until the market catches up.

Act now before the AI infrastructure boom becomes too obvious.