Could Marvell Technology’s Stock Price Triple By 2027?

Bleeker pointed out that while Marvell’s recent analyst day suggested a positive outlook, the stock’s performance quickly faded, reflecting ongoing investor skepticism. He noted that a deal with Microsoft could lead to significant revenue growth, with projections estimating $2.4 billion in by 2026, and upside of $10 to $12 billion in revenue by 2027.

However, the analysts cautioned that until Marvell demonstrates consistent execution, it may not receive the same market multiple as competitors like Broadcom. The discussion concluded with Bleeker suggesting that for investors considering Marvell, call options might offer a more favorable risk-reward scenario than direct stock purchases, especially given the uncertain short-term market dynamics.

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Transcript 

Austin (Host): Let’s move on to Marvell. This is one of the highest risk-reward plays in the portfolio, but they’ve got some key partnerships, particularly with Amazon and Microsoft. Can you talk to me a little bit about Marvell today and how they compare to other players in this space?

Eric Bleeker (24/7 Wall St. Analyst): If you were going to bum me out with the Amazon tee-up, Marvell is broadly speaking the most disappointing stock in the portfolio.

I think it’s worth an update, and they actually had some specific news this week, so we’ll cover both. For anyone listening, especially if you’re newer, there’s an opportunity around custom chips. Companies like Amazon, Google, or Microsoft are looking to build their own custom chips designed for AI workloads. This not only gives them a differentiation factor but also leverage over Nvidia in negotiations.

Broadcom is worth $1.4 trillion with major partnerships with companies like Meta and Google, which is their best partnership, and OpenAI.

Marvell’s bull case is that they have partnerships with Microsoft and Amazon, but they’re worth $70 billion, about 20 times less. They also have a strong portfolio of connectivity products, like digital signal processors.

This week, a Wall Street firm estimated that their deal with Microsoft will deliver $2.4 billion in revenue to Marvell in 2026 and $10-12 billion in 2027. For perspective, Wall Street expects Marvell to generate $9.8 billion as a whole that year. This one chip could be bigger than the entire current expectations. In terms of earnings, Wall Street expects around $4 in profits in 2027, which could take Marvell up past $8 to $10, potentially 100-150% greater than expectations. If you’re looking at $10 per share, Marvell is currently trading slightly above $70 per share, meaning it’s trading for seven times earnings for some of the highest growth in the portfolio.

It sounds like a slam dunk. So why are we not backing up the truck and putting every dollar into the stock? That is the question.

Austin: Portfolio management. You’re about to explain why even a perfect narrative sometimes doesn’t unfold. What’s going on?

Eric Bleeker: The big thing is Marvell was up 11% the morning after this news broke, as you’d expect. I told some people I bet these gains would be gone within a few days. And you know what? As of this morning, they’re gone. The day the news broke, Marvell was trading at $76.45 a share. Today, at the time of this recording, it’s $76.20. There you go.

The reason for this is Marvell hosted an analyst day and gave an outlook that suggested they would crush Wall Street expectations. However, the excitement faded quickly. Marvell has been a serial underperformer over time. They have an amazing opportunity, but there’s a lot of skepticism about their performance in the broader networking and connectivity space. There’s always a risk that they have to execute. They have this deal with Microsoft, but Microsoft is hedging its bets and working with other firms to develop chips. Will they actually get this to market? It seems like Marvell is kind of star-crossed.

Eric Bleeker: It has the potential to rise two to three times from where it’s at today if it can fulfill these deals, but it needs to execute. Until we see that execution, the street won’t rerate it the same way it has Broadcom. When it comes to Marvell, it’s the most disappointing stock in the portfolio. It’s a battleground stock we’re going to leave as is despite the potential. If anyone’s been looking at Marvell and wondering what’s going on, this is the situation.

Austin: Eric, you’re going to hate me for this analogy, but when I hear about a very promising domestic chip maker with execution risk and a history of underperformance, I could be forgiven for thinking you were talking about Intel instead of Marvell. When you see companies like Marvell and Intel, where there is a major movement to bring manufacturing back to the U.S., AI is a multi-billion dollar race, and there’s a lot of capital flooding through. We referenced the book “Chip War” and how much domestic government investment set the U.S. chip industry on an incredible trajectory. It feels like we might be at a similar moment with major infrastructure spending. Is it worth considering call options on Marvell or Intel? Very low percent of your portfolio, but these domestic champions that need a lifesaver could re-rate quickly if they get one. Is that a way to play these?

Eric Bleeker: You’re setting me up here, Austin. I own call options on Marvell in part because of this optionality. If these contracts play out, they will be worth significantly more. If not, it feels superior to buying the shares. Of course, that’s dependent on how aggressively options are priced. If you were purchasing today, that might be the superior plan, but it comes down to timing. Will they rerate by the time your options expire? If you’re doing that, you’d probably want to look out to January 2027 because it’s hard to get an advantage on Marvell in the short term. It’s moving entirely on supply chain chatter, where big hedge funds have an advantage, and individual investors have none.

If you’re holding a thesis over a few years, you might do well, but if you’re trying to trade the stock in the short term, it’s not going to go well for you.

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