Marvell’s (MRVL) Results Are A Wonder As Data Center Market Remains Red Hot
2:52 pm Friday, May 27th, 2022
Marvell (MRVL) is providing a lift for the semiconductor space today after the company reported 1Q23 results that edged past EPS and revenue estimates, while also issuing inline FY23 guidance. Similar to fellow chip maker NVIDIA (NVDA), which reported quarterly results on Wednesday, MRVL’s solid performance was driven by the data center end market as revenue soared by 131% yr/yr in that business. However, unlike NVDA, the company’s outlook wasn’t significantly impaired by lockdowns in China or the war in Ukraine. Recall that NVDA estimated that those two factors will negatively impact its July quarter revenue by about $500 mln.
Robust demand across MRVL’s end markets is enabling it to overcome these stiff macroeconomic and geopolitical headwinds.
Accounting for about 45% of total revenue, data center continues to be the star of the show for MRVL as demand for its cloud-based products (ethernet switches, optics, etc.) remains very healthy. A main source of the strength stems from MRVL’s hyperscale customers, which are increasingly turning to AI and machine learning technologies. These new use cases, which also require more bandwidth and processing power, are creating content growth opportunities within data centers.
This momentum is expected to continue in Q2 with MRVL projecting data center revenue to grow by approximately 50% on a yr/yr basis. That’s especially impressive considering that data center revenue surged by 62% in the year-earlier period.
The company now has ethernet design wins at eight of the top ten largest auto OEMs. Content per vehicle is also growing rapidly as the electrification of cars continues to grow, requiring higher-speed connectivity and more bandwidth.
The main takeaway is that MRVL is ideally positioned to capitalize on a few different secular trends across a mix of end markets. While the company is not immune from supply chain disruptions or macroeconomic risks, its diverse set of growth catalysts is allowing it to weather challenging conditions better than most tech companies.
