Marvell Technology, Inc. (MRVL.US)Q1 financial report greatly exceeds expectations: full-year guidance significantly raised, 2029 custom chip revenue targeted at $10 billion.

Thanks to the strong push of the Artificial Intelligence (AI) data center construction trend, semiconductor manufacturer Marvell Technology, Inc. (MRVL.US) delivered a comprehensive first quarter financial report for the 2027 fiscal year that exceeded expectations on May 27th after the stock market closed on the east coast time, and significantly raised its performance outlook for the full year and the next few years. Boosted by this news, the company's stock price surged nearly 10% after hours. Q1 Performance Exceeded Expectations, Strong Q2 Guidance The financial report showed that Marvell Technology, Inc.'s first quarter revenue increased by 28% year-on-year to $2.42 billion, exceeding market expectations of $2.41 billion. Adjusted earnings per share were $0.80, higher than the analysts' consensus estimate of $0.79. The adjusted gross margin reached 58.9%, in line with market expectations. As the company's core growth engine, the data center business achieved revenue of $1.83 billion in the first quarter, a 27% year-on-year increase, also exceeding market expectations of $1.81 billion. This performance continued the strong momentum from the previous quarter, with the data center business increasing its share of total revenue from 74% to 76%. Looking ahead to the second quarter, Marvell Technology, Inc. provided performance guidance that excited the market. The company expects second quarter revenue to be around $2.7 billion, with a 5% fluctuation range, significantly higher than the analysts' average expectation of $2.6 billion. The adjusted earnings per share guidance range is $0.93, with a 5 cent fluctuation range, also higher than the market expectation of $0.90. "Marvell Technology, Inc. achieved record high revenue in the first quarter of the 2027 fiscal year," said Chairman and CEO Matt Murphy in the financial report statement. "The mid-range revenue guidance for the second quarter is $2.7 billion, with a year-on-year increase of 35%. We are seeing strong momentum in AI-related orders, so we have significantly raised our revenue outlook for the 2027 fiscal year and the 2028 fiscal year." Continued Upward Revision of Performance Outlook: Custom Chip Revenue Aiming for $10 Billion in 2029 In this financial report, Marvell Technology, Inc. provided long-term revenue outlook that further boosted market confidence. The company expects full-year revenue for the 2027 fiscal year to reach approximately $11.5 billion, a year-on-year increase of about 40%, higher than the analysts' and the company's previous estimate of $11 billion. Additionally, the company also raised its 2028 fiscal year revenue outlook to around $16.5 billion, up from the previous estimate of $15 billion, indicating a further 44% growth in revenue for the 2028 fiscal year compared to the 2027 fiscal year. The outlook for the custom chip business is particularly noteworthy. Marvell Technology, Inc. expects its custom chip business revenue to surpass the $10 billion mark by the 2029 fiscal year. Morningstar analyst William Kerwin pointed out that this guidance implies that "from the 2028 fiscal year to the 2029 fiscal year, this single business alone will bring in an additional $5 billion in revenue, indicating that 2029 is expected to be another strong growth year." Murphy also mentioned on the conference call that the company has custom chip collaboration projects with all major cloud service providers in the United States, highlighting Marvell Technology, Inc.'s deep layout in this high-growth track. "AI ASIC+ Optical Interconnect" Dual Engine Logic Continues to Deliver Behind the continued strong performance of Marvell Technology, Inc. is the strong support of the two core growth engines, AI custom chips (ASIC) and optical interconnect. As cloud computing giants accelerate the construction of AI data centers, more and more companies are choosing customized AI chip solutions for cost-effectiveness and performance optimization, reducing their reliance on NVIDIA Corporation's (NVDA.US) general GPU processors. Marvell Technology, Inc. and its larger competitor, Broadcom Inc. (AVGO.US), are the core beneficiaries of this trend - according to industry analysis, the two companies together control about 95% of the custom AI ASIC joint design market. Marvell Technology, Inc.'s custom chip business is rapidly growing into an important source of revenue. In the 2026 fiscal year ending in February, its custom chip business had an annual revenue of approximately $1.5 billion and had secured design orders from 18 cloud providers. Citigroup Inc. analyst Atif Malik pointed out that the market's surging demand for Amazon.com, Inc.'s Trainium 2 AI accelerator is a core driver of Marvell Technology, Inc.'s profitability. Marvell Technology, Inc. has collaborated with Amazon.com, Inc.'s web services company (AWS) to design the Trainium 2 chip, establishing a direct and deepening revenue relationship with one of the world's largest AI spenders. At the same time, Marvell Technology, Inc. has also collaborated with Microsoft Corporation (MSFT.US) to develop the Maia AI chip, further expanding its influence in the custom chip market. In the field of optical interconnect, as AI cluster sizes expand from single racks to multiple rack "AI factories," traditional copper cable connections have reached their physical limits in terms of data transmission rates and power consumption, driving data center interconnection to accelerate towards optical interconnect. With its leading position in the 800G and 1.6T digital signal processor (DSP) fields, Marvell Technology, Inc. firmly occupies this crucial position. HSBC analyst Frank Lee pointed out that "the market still underestimates the revenue growth of the optical interconnect business," and he believes Marvell Technology, Inc. will be a "major beneficiary" of this "multi-year super cycle." The AI infrastructure investment boom is still in its infancy Marvell Technology, Inc.'s strong performance is a microcosm of the current AI infrastructure investment boom. It is estimated that the spending of U.S. tech giants, including Alphabet Inc. Class C (GOOGL.US) and Amazon.com, Inc., on AI infrastructure this year is expected to exceed $700 billion, a significant increase from the approximately $400 billion in 2025. The capital expenditure of super-scale cloud service providers continues to accelerate, creating a broad market space for continuous growth for custom chip manufacturers like Marvell Technology, Inc. and Broadcom Inc. Murphy said, "We expect revenue growth to accelerate quarter by quarter throughout the entire 2027 fiscal year, thanks to the continuous strong performance of our data center business."