The Six Five team discusses Marvell Earnings Q4 FY2024.
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Transcript:
Daniel Newman: Marvell. So you know, data and accelerated infrastructure, we talked about Avago, Broadcom. Another one that reported this week as well, Marvell.
Patrick Moorhead: Yeah. So again, stock didn’t do very well after this. And I’m going to focus on long-term here. But for the quarter, data infrastructure was 89% of total revenue. Big message here is it slowly is unwinding its consumer assets. And I know it’s hard to believe that Marvell was ever end consumer, but they were the storage technology to the consumer market for years, and they’re still shipping products into even game consoles.
So it’s really a tale of two cities here. First is the data center city, which grew 54% year over year. And then there’s the enterprise networking, carrier infrastructure, and auto and industrial, which had some pretty big declines. And even though data infrastructure was up, sorry, data center revenue was up, it just wasn’t enough to offset the decliners. And I want to be really clear, it’s not that Marvell is doing anything wrong. This is market led. Some interesting stuff that came up on the call that I wanted to talk about, and one was that the company said it’s expecting its two AI compute programs. Read that as AI SOC or AI ASIC, we don’t know what that is yet, to have a very substantial ramp in the second half of the fiscal year.
Daniel Newman: Cloud optimized silicon, Pat?
Patrick Moorhead: That’s exactly right. That’s the AI optimized silicon. We don’t know if it’s an ASIC, like Broadcom does or an SOC. I’m guessing it’s a full tilt SOC, given the intellectual property that Marvell brings to the table. And then I look long term, I got to tell you, the way to lower power and increase speed is through fiber. And this company, more than any company, has some incredible assets that not only connect let’s say racks inside the AI data center, but it connects other data centers as well. And we’re getting to 1.6 terabit PAM for the interconnect inside. And on what they call DCI products that’s between, you’re looking at 400, moving to 800 gigabit per second traffic.
So long term, I mean they’re in the right place. Imagine when these markets that are in the toilet. I mean, we saw what happened to Cisco, enterprise networking, not great. Carrier, people are struggling to find monetization for 5G, down. Industrial IOT and overall automotive is down. Anyways, future opportunities are bright for this company.
Daniel Newman: Yeah, I tend to stay bullish in sentiment on this one because I think the need for the accelerated infrastructure is a lagging data point from all the investment in compute. You heard us talk about two years worth of compute horsepower sitting in a Chinese cloud provider that haven’t been yet implemented and deployed. So have they lit up the north-south on these things yet and all that’s required? Have they even bought it? Because one is, if they don’t believe, again, capital expenditure, they’re buying all the GPUs because it’s like an arms race.
They got to get their hands on them, they got to fill up trucks with them. But you can get the networking chips later. You don’t have to buy all that in advance necessarily. So some of that purchasing can come later. It’s the same thing Cisco’s saying about private enterprise data center, edge clouds, telecommunications, network north-south. But for AI, that’s part of it.
But Pat, also look, the numbers are moving and trending in the right direction. I mean, they had quarter-over-quarter growth. It was small, but they had data center quarter-over-quarter growth of 38%, and 54% year-on-year. So they’re getting the bump on a year-on-year basis. And they saw their data center revenue grow to record levels, close to $800 million in the last quarter.
And they had their AI revenue exceed 200 million in a quarter. So they’re near on pace to have a billion dollar annual run rate for AI accelerated infrastructure. They’re going to be building ASIC or system for AI, and they’re going to be able to basically provide that to companies. They’re going to be one of the people answering questions about creating those custom AI chips that are going to be used. This is going to be one of the companies that are going to provide it. So I like their prospects long term.
I mean, look, this is always going to be less sexy than GPUs or even just companies that focus purely on compute. They’re a company that’s well diversified, and that diversification can be very beneficial at times and it can also be problematic at times. So right now with the carrier numbers being pretty horrific, it’s offsetting all the good stuff that’s going on for them in the data center. But there was a period of time where industrial and carrier were carrying while the other stuff-
Patrick Moorhead: Exactly.
Daniel Newman: So very rarely are they all moving. So when you’re more diversified, you tend to suffer cycles. When you’re less diversified, you’re more boom and bust. So I like Marvell’s business overall. I’ve been bullish on it for a long time. I liked it before people even knew to like it, and now it is coming good because that networking bomb, that connectivity, that accelerated infrastructure and those custom chips will all be more in demand in future quarters.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
