Analysts downgrade Marvell stock amid near-term challenges
Deutsche Bank analysts have downgraded Marvell Technology's stock to 'hold' from 'buy,' citing prolonged inventory issues despite strong long-term potential in AI and data centers. The firm lowered its price target to $75 from $80. Shares fell 2.5% in premarket trading following the report.
Marvell Technology Inc., a semiconductor company focused on data infrastructure, faced a downgrade from Deutsche Bank on Wednesday. Analysts led by Ross Seymore shifted the rating to 'hold' from 'buy' and reduced the price target to $75 from $80. This move came even as the firm highlighted significant upside in Marvell's exposure to artificial intelligence and data center markets.
The downgrade stems from near-term headwinds, particularly the extended digestion of inventory in enterprise networking and carrier markets. Seymore noted in the research note, 'While we still see huge potential in the AI and data center markets, the prolonged inventory digestion in the enterprise and carrier markets has pushed out our visibility on the recovery.' These challenges have impacted Marvell's recent performance.
In its fiscal second quarter, ended May 4, Marvell reported revenue of $1.27 billion, marking a 7% increase from the prior year but falling short of Wall Street expectations. Adjusted earnings per share came in at 29 cents, down from 43 cents a year earlier. Looking ahead, the company guided for third-quarter revenue between $1.45 billion and $1.55 billion, below analysts' consensus estimate of $1.60 billion.
Marvell's stock has struggled this year, declining about 40% year-to-date amid broader concerns in the semiconductor sector. The premarket drop of 2.5% on Wednesday reflects investor reactions to the tempered outlook. Despite these issues, Deutsche Bank's assessment underscores Marvell's positioned growth in high-demand areas like AI, where the company provides chips for data processing and connectivity.
This analyst action occurs against a backdrop of mixed results in the chip industry, where companies balance innovation with supply chain adjustments. Marvell, headquartered in Santa Clara, California, continues to invest in next-generation technologies, but the downgrade signals caution for the immediate future.