Investing in fast-growth companies with solid prospects while they are trading at attractive valuations can be a reliable formula for making money in the stock market, and that’s the reason why taking a closer look at Marvell Technology (MRVL -1.40%) right now would be a good idea. The chip designer’s stock has had an uninspiring 2025 so far, losing 31% of its value as of this writing.
The reason behind this drop is simple. Though Marvell has been registering outstanding growth, its impressive guidance has not been matching up to Wall Street’s elevated expectations. The stock was down nearly 20% in a single day in March this year following its quarterly report as its outlook fell shy of the higher end of analysts’ expectations, even though it was better than the midpoint of expectations.
A similar story unfolded in June as the company delivered terrific results, but nitpicking by analysts about the company’s relationship with one of its customers sent its stock packing once again. However, Marvell’s growth and prospects for the company’s end market should cause investors to look beyond the stock’s latest slump.
The shares now trade at just under $80 per share. So if you have even $80 that you’re ready and able to invest today, buying Marvell stock with that money could turn out to be a smart long-term move.
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Marvell’s prospects and valuation make it a no-brainer buy
Marvell stock’s steep decline in 2025 means that investors can get a great deal on it right now. It is now trading at just 22 times earnings, which is a nice discount to the tech-centric Nasdaq-100 index’s average earnings multiple of 32.
Yet, Marvell has been clocking incredible growth of late thanks to the lucrative market for custom artificial intelligence (AI) processors. Marvell controlled less than 5% of the custom AI processor market in 2023, when the size of the market stood at $6.6 billion. However, the company is aiming to increase its share to 20% by 2028, when it expects the size of that market to top $55 billion. That would put Marvell’s custom AI revenue at $11 billion in three years.
Meanwhile, Marvell sees its overall opportunity in the data center market — including switching, storage, and data center interconnect — increasing from $33 billion last year to $94 billion in 2028. It aims to corner 20% of this opportunity as well, up from 13% last year. The potential expansion of Marvell’s data center opportunity along with the jump in its market share could take the company’s data center revenue to just under $19 billion. That would be nearly five times the data center revenue it generated in its fiscal 2025 (which ended on Feb. 1).
The important thing to note is that Marvell could indeed grab a bigger share of the custom AI processor market. The company pointed out at an AI-specific investor event last month that its custom AI chips are currently used by four customers. However, it expects to increase that count to 10 over the next three years by focusing on aggressive product development.
The company is designing smaller chips that pack in more computing power while simultaneously reducing energy consumption, apart from improving its packaging technology so that it can equip custom AI processors with more high-bandwidth memory (HBM). Marvell has already announced that it is working on a 2-nanometer (nm) chip platform that could provide a 20% to 35% reduction in electricity consumption while increasing computing performance by 15% as compared to chips manufactured on the 3nm platform.
As such, it won’t be surprising to see the company getting more customers for its custom AI processors and delivering the healthy growth that it is projecting. That’s why investors can expect this stock to blow past expectations.
The chipmaker could grow much faster than the market expects
The analysts’ consensus projections are for Marvell’s revenue to increase at a healthy double-digit percentage rate over the next couple of fiscal years following a 43% increase in the current one.
MRVL Revenue Estimates for Current Fiscal Year data by YCharts.
However, the growth potential of the data center business could help the company significantly exceed analysts’ expectations. Marvell finished its fiscal 2024 with $5.77 billion in revenue, $4.16 billion of which was from the data center segment. If the company’s data center revenue is five times higher in 2028, its top line could easily crush the forecast seen in the chart above.
As a result, there is a strong possibility of Marvell stock regaining its mojo and flying higher in the long run. Throw in the company’s attractive valuation, and it is easy to see why it looks like one of the smartest growth stocks to buy with just $80.
