Why Marvell Technology’s AI Infrastructure Play Makes It a Buy Despite Near-Term Hesitation

As the global race to dominate AI infrastructure intensifies, Marvell Technology (MRVL) is positioned at the epicenter of a transformative shift. Despite recent analyst caution—including Morgan Stanley’s “Equal Weight” rating—the company’s entrenched design wins with Microsoft (Azure Maia 2) and Google (Axion processor), coupled with $90+ upside potential, suggest its stock is primed for a resurgence. Here’s why long-term investors should ignore the noise and embrace this undervalued AI infrastructure leader.

The AI Infrastructure Boom: Marvell’s Pivotal Role

Marvell’s recent collaborations with hyperscalers are not mere partnerships—they’re strategic alliances with high switching costs that lock in decades of recurring revenue. Consider:

1. Microsoft’s Azure Maia 2: Marvell is manufacturing the next-gen AI accelerator chip for Microsoft’s cloud, designed to power generative AI and large language models. This win, announced in 2024, signals Marvell’s end-to-end AI infrastructure dominance, from custom compute to photonics.
2. Google’s Axion Processor: While shrouded in NDAs, Marvell’s Q2 2024 investor event revealed a “third U.S. hyperscaler” win—widely identified as Google. The Axion, a custom ARM-based CPU, integrates Marvell’s IP for interconnects, SerDes, and photonics, reducing Google’s reliance on third-party chips.

These wins are no fluke. Marvell’s 45% CAGR for custom silicon through 2028 and 78% YoY data center revenue growth in FY2025 underscore its irreplaceable role in hyperscaler AI stacks. Competitors like Broadcom (AVGO) and Intel (INTC) lack Marvell’s 3D Silicon Photonics (SiPho) engines and Co-Packaged Optics (CPO), which are critical for high-speed data transfer in AI clusters.

Why the Near-Term Dips Are a Buying Opportunity

Critics cite Marvell’s March 2025 stock crash—20% in a single day—after guidance fell short of aggressive expectations. But this overlooks the structural tailwinds fueling its growth:

• High Switching Costs: Once Microsoft and Google embed Marvell’s IP into their silicon ecosystems, they cannot easily pivot to alternatives without massive retooling costs. This ensures sticky revenue streams.
• Undervalued Stock: Analysts project a $110.5 average price target (current price ~$60), implying 84% upside. Even conservative estimates suggest a $90+ upside by 2026.
• AI’s Explosive Demand: The $110B AI infrastructure market is growing at a 32% CAGR, and Marvell’s custom compute wins account for over half its data center revenue.

The chart above reveals Marvell’s underperformance relative to peers like Broadcom—despite its superior AI infrastructure focus. This divergence is a valuation anomaly that will correct as hyperscaler AI spending accelerates.

Analysts Are Wrong: The Bullish Case for MRVL

Morgan Stanley’s “Equal Weight” rating ignores three critical factors:

1. 42% FY2026 Revenue Growth Forecasts: Analysts project Marvell’s revenue to jump from $6.7B in FY2025 to $9.5B in FY2026, driven by AI-driven hyperscaler demand.
2. Moats in Custom Silicon: Marvell’s co-design partnerships with hyperscalers create defensible moats. Unlike GPUs, which can be substituted, custom chips are embedded into proprietary architectures, locking in customers.
3. Diversification Beyond Cloud: Marvell’s automotive and industrial IoT divisions, growing at 20%+ CAGR, provide a cushion against AI market volatility.

The near-term skepticism is misplaced. While short-term volatility may persist, Marvell’s AI infrastructure leadership is a multiyear growth story.

Conclusion: Buy Marvell Before the Street Catches On

Marvell’s stock is a textbook “value trap turned growth story”. The hyperscaler AI arms race is real, and Marvell’s role as a critical supplier of custom silicon, photonics, and interconnects is irreplaceable. With a $90+ upside, a $110.5 average price target, and a 42% revenue growth forecast, this is a rare chance to buy a dominant tech player at a 30% discount to its intrinsic value.

Action: Buy Marvell Technology (MRVL) now. The AI infrastructure boom isn’t slowing—investors who wait risk missing the next leg of this journey.

Disclosure: This analysis is based on public data and does not constitute financial advice. Always conduct your own research.