Marvell Technology Inc. witnessed a notable surge in its data-center business during the most recent quarter, primarily fueled by heightened demand for artificial intelligence (AI) technology. This positive trend underscored the company’s strategic positioning in the burgeoning AI market. However, despite the promising performance in this segment, Marvell’s overall stock experienced a decline in after-hours trading, as other areas of its business faced challenges.
The data-center end-market revenue soared by an impressive 87% compared to the same period last year, surpassing the already robust 54% growth rate observed in the previous fiscal quarter. Marvell’s Chief Executive Officer, Matt Murphy, attributed this success to the commencement of custom AI programs, which effectively complemented the company’s existing revenue streams derived from electro-optics.
While the momentum in AI technology served as a significant growth driver, Marvell encountered headwinds in its more traditional business segments. Other divisions, aside from the data center, reported declines in revenue, indicating a mixed performance across the company’s portfolio.
Despite the challenges, Marvell managed to post total revenue of $1.16 billion for the quarter, slightly down from the $1.32 billion reported in the corresponding period of the previous year. Nonetheless, this revenue figure surpassed analysts’ expectations, which had anticipated revenue of around $1.15 billion.
However, the positive revenue figures were not sufficient to offset concerns among investors, leading to a 4% decline in Marvell’s stock during after-hours trading following the earnings announcement.
Breaking down the segment performance further, enterprise networking revenue witnessed a substantial decline of 58% year-over-year, amounting to $153 million. Similarly, revenue from the carrier-infrastructure segment plummeted by 75% to $72 million. Consumer revenue also experienced a significant drop of 70% to $42 million, while automotive and industrial revenue decreased by 13% to $78 million.
Marvell reported a net loss of $216 million, or 25 cents per share, compared to a loss of $169 million, or 20 cents per share, in the corresponding quarter of the previous year.
Looking ahead, Marvell provided a second-quarter outlook forecasting $1.25 billion in revenue at the midpoint, along with adjusted earnings per share of 29 cents. These projections exceeded analysts’ consensus estimates, which had anticipated revenue of $1.22 billion and earnings per share of 28 cents, respectively.
Despite the challenges faced in certain business segments, Murphy expressed optimism about Marvell’s future prospects. He emphasized the company’s continued growth trajectory in the data center and anticipated a recovery in the enterprise networking and carrier infrastructure segments, setting a positive tone for the remainder of the fiscal year.