Key Takeaways:
- AI Infrastructure Leader: Marvell delivered record Q3 revenue of $2.08 billion, up 37% year-over-year, fueled by explosive AI data center demand.
- Price Projection: Based on current momentum, the stock could reach $134 by January 2028.
- Potential Gains: This target implies a total return of 62% from the current price of $83.
- Annual Return: Investors could see roughly 27% annual growth over the next 2.0 years.
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Marvell Technology (MRVL) just announced a transformational acquisition that positions the company at the forefront of next-generation AI infrastructure.
The purchase of Celestial AI brings groundbreaking photonic fabric technology designed specifically for scale-up interconnects—the high-bandwidth, low-latency links that connect hundreds of AI accelerators across multiple racks.
This strategic move follows Marvell’s impressive track record of acquisitions. Since 2019, deals like Inphi and Innovium have been “absolute home runs” according to CEO Matt Murphy.
Industry analysts forecast that the merchant-scale-up switch market alone will approach $6 billion by 2030, while optical interconnects could exceed $10 billion.
But the acquisition story is just the beginning.
- Marvell’s core business delivered exceptional Q3 results, with data center revenue hitting $1.52 billion—representing 73% of total revenue.
- The company’s interconnect business continues to grow faster than cloud CapEx, which itself is expected to increase by more than 30% next year.
At $83, MRVL stock offers substantial upside for investors who understand the company’s comprehensive positioning across every element of AI infrastructure—from custom chips to optical interconnects to data center switches.
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What the Model Says for Marvell Stock
We analyzed Marvell through CEO Matt Murphy’s strategic vision: becoming the one-stop shop for AI data center infrastructure with solutions spanning interconnects, custom chips, switching, and now photonic fabrics.
Marvell expects data center revenue to grow more than 25% in fiscal 2027, with even faster growth accelerating in fiscal 2028. This excludes any contribution from Celestial AI, which is expected to reach a $500 million revenue run rate by Q4 fiscal 2028, doubling to $1 billion by Q4 fiscal 2029.
Using a forecast of 30% annual revenue growth and 36.8% operating margins, our model projects the stock will rise to $134 within 2.0 years. This assumes a 22x Price-to-Earnings multiple, representing compression from Marvell’s current P/E of 24.6x.
As the company invests heavily in photonic technology integration and scales its custom chip business, some multiple compression is reasonable.
The real value comes from Marvell’s unique position across the entire AI infrastructure stack and multiple high-growth product cycles converging simultaneously.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for MRVL stock:
1. Revenue Growth: 30%
Marvell’s growth engine benefits from several powerful trends accelerating simultaneously.
Interconnect Dominance: The company’s optical interconnect business grew by double digits on a percentage basis sequentially in Q3. Marvell leads at every speed—800G, 1.6T, and now sampling 3.2T solutions.
Custom Chip Momentum: Custom revenue is expected to grow at least 20% in fiscal 2027, with the second half showing much stronger sequential growth. Marvell has secured 18 XPU and XPU-attach design wins with over $75 billion in lifetime revenue opportunity. New wins added since June represent another 10% to this funnel.
Switching Acceleration: Data center switching revenue will exceed $300 million this fiscal year and is expected to surpass $500 million next year. Marvell is shipping 51.2T products with 100T solutions launching next year.
2. Operating margins: 36.8%
Marvell operates with expanding margins driven by operating leverage as revenue scales.
Current Performance: Non-GAAP operating margin reached 36.3% in Q3, up 150 basis points sequentially. The company is successfully balancing growth investments with profitability expansion.
Operating Leverage: Management expects non-GAAP operating expenses to increase at roughly half the rate of revenue growth in fiscal 2027. This demonstrates significant operating leverage as the business scales, even while investing in new product development.
Strong Cash Generation: Operating cash flow hit a record $582 million in Q3, growing $121 million sequentially. This enables continued investment while returning capital to shareholders through buybacks and dividends.
3. Exit P/E Multiple: 22x
The market currently values Marvell at 24.6x earnings. We chose 22x for our exit multiple to stay conservative.
Below Historical Average: Marvell’s P/E has averaged 26.6x over the past year and 31.9x over five years. The current multiple reflects strong AI momentum, but some compression is likely as the company scales and margins normalize from peak investment periods.
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What Happens If Things Go Better or Worse?
Semiconductor companies face challenges from competitive pressure, technology transitions, and cyclical end markets.
Here’s how Marvell stock might perform under different scenarios through January 2028:
- Low Case: If revenue growth slows to 25.9% and net income margins compress to 27.2%, the stock still offers an 18.6% annual return.
- Mid Case: With 28.8% growth and 28.9% net margins, we expect an annual return of 27.9%.
- High Case: If AI infrastructure buildout accelerates and Marvell maintains 30.3% margins while growing at 31.7%, returns could hit 36.9% annually.
See what analysts think about MRVL stock right now (Free with TIKR) >>>
The range reflects different outcomes for AI infrastructure spending and Marvell’s execution on multiple product ramps.
In the low case, cloud CapEx growth disappoints, or custom chip transitions face delays.
In the high case, Celestial AI integration succeeds ahead of schedule, optical interconnect share gains accelerate, and scale-up switching captures larger-than-expected market share as next-generation AI clusters demand unprecedented connectivity.
How Much Upside Does Marvell Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
