MRVL rallies 8% as AI-driven growth continues

Marvell Technology (MRVL) delivered strong Q3 FY2025 results, exceeding expectations on both EPS and revenue. Adjusted EPS came in at $0.43, surpassing the $0.41 consensus estimate, while revenue of $1.52 billion marked a 6.9% year-over-year increase, beating expectations of $1.45 billion. Sequentially, revenue grew by 19%, reflecting strong execution and increasing demand for the company’s products, particularly in AI-driven applications.

Marvell’s non-GAAP gross margin stood at 60.5%, slightly below the prior year’s 60.6% but demonstrating stability in profitability. GAAP gross margin was lower at 23.0%, reflecting higher costs. For Q4 FY2025, the company issued optimistic guidance, forecasting revenue of $1.8 billion (+/- 5%) and adjusted EPS of $0.59 (+/- $0.05), both above analyst estimates of $1.65 billion and $0.52, respectively. The guidance implies a sequential revenue increase of 19% and year-over-year growth of 26%, indicating continued momentum.

Marvell’s strong performance was attributed to robust demand for its custom AI silicon and market-leading interconnect products. AI-related revenue emerged as the primary growth driver, with custom silicon programs now in volume production. CEO Matt Murphy highlighted AI’s transformative impact, stating that it fueled the company’s sequential and projected year-over-year growth. AI revenue is expected to remain a critical contributor as Marvell capitalizes on the rapid adoption of AI infrastructure.

While AI-driven demand propelled data center revenue, other segments faced headwinds. Consumer revenue declined 43% year-over-year, carrier infrastructure revenue fell 73%, and enterprise networking revenue dropped 44%. Automotive and industrial revenue also dipped 22% year-over-year. Despite these declines, the strength in data center and AI applications offset weakness in other areas, highlighting Marvell’s strategic pivot toward growth markets.

Marvell generated $536.3 million in cash flow from operations during the quarter, reflecting robust financial health. Adjusted operating expenses were well-controlled at $480 million, supporting the company’s ability to sustain profitability despite macroeconomic pressures. Non-GAAP gross margin guidance for Q4 was maintained at approximately 60%, demonstrating confidence in margin stability as AI demand scales.

Following the results, Marvell shares surged over 8% in after-hours trading, reflecting investor enthusiasm over its strong Q3 performance and optimistic Q4 outlook. With the stock already up 59% year-to-date, the earnings report reinforced confidence in Marvell’s leadership in AI-driven semiconductors. The market reacted positively to the company’s ability to exceed guidance and capture AI-related growth opportunities.

Marvell’s Q3 results underline its successful transition toward AI-driven growth, with custom silicon and interconnect products positioned to benefit from secular trends in cloud and data center demand. The company’s Q4 guidance signals a strong finish to FY2025, while expectations for fiscal 2026 momentum highlight its potential to further capitalize on the AI wave. As AI adoption accelerates, Marvell’s strategic focus and robust execution leave it well-positioned to sustain long-term growth.