1 Artificial Intelligence (AI) Stock You May Want to Keep an Eye on Following Its Latest Pullback

Marvell Technology‘s (NASDAQ: MRVL) red-hot stock market rally came to a grinding halt following the release of the company’s fiscal 2024 fourth-quarter results (for the three months ended Feb. 3, 2024) as its guidance turned out to be significantly below Wall Street’s expectations.

Shares of the company, whose chips are deployed in multiple end markets ranging from data centers and vehicles to routers and networking appliances, have been retreating since the report came out on March 7. That isn’t surprising as Marvell’s results weren’t impressive enough for a stock that had shot up over 100% in the preceding year.

Let’s see what went wrong with Marvell last quarter, and check if the stock’s dip is a buying opportunity thanks to its growing artificial intelligence (AI) business.

Marvell Technology’s guidance paints a grim picture

Marvell reported fiscal Q4 revenue of $1.43 billion, a marginal increase of just 1% from the year-ago period. The company’s non-GAAP earnings were also flat on a year-over-year basis at $0.46 per share. Consensus estimates were modeling $0.46 per share in earnings on $1.42 billion in revenue, so the company barely scraped past expectations.

The guidance, however, fell short. Management expects to earn $0.23 per share in the first quarter of fiscal 2025 on revenue of $1.15 billion at the midpoint. Given that the company delivered $0.31 per share in earnings on $1.32 billion in revenue in the same quarter last year, the guidance means both Marvell’s top and bottom lines are on track to shrink in the current quarter.

For a stock trading at 13.3 times sales just before the latest earnings report — far higher than its five-year average multiple of 8.7 — Marvell needed to deliver much better guidance. However, weakness in almost all of Marvell’s end markets aside from the data center business are weighing on the company’s results. Last quarter, Marvell’s revenue from the enterprise networking business was down 28% year over year, while carrier infrastructure fell 38%. The consumer and automotive/industrial businesses were down 20% and 17%,…


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