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Marvell Q2 Fiscal 2024: AI and Cloud Are Top Growth Drivers

Marvell Q2 Fiscal 2024: AI and Cloud Are Top Growth Drivers

The News: Marvell Technologies Inc (NASDAQ: MRVL), a provider of data infrastructure semiconductor solutions, reported financial results for the second quarter (Q2) of fiscal year 2024. Read the Press Release on Marvell’s website.

Marvell Q2 Fiscal 2024: AI and Cloud Are Top Growth Drivers

Analyst Take: In fiscal Q2 2024, Marvell generated net revenue of $1.341 billion, which was $11 million above the midpoint of the company’s guidance provided on May 25, 2023. GAAP net loss for fiscal Q2 2024 was $207.5 million, or $0.24 per diluted share. Non-GAAP net income was $290.2 million, or $0.33 per diluted share. Cash flow from operations for Q2 was $112.5 million.

Marvell President and CEO Matt Murphy spotlighted that the company delivered Q2 fiscal 2024 revenue above the midpoint of guidance. As such, Marvell is forecasting sequential revenue growth to accelerate in Q3 fiscal 2024. Marvell’s growth is being driven primarily by AI and cloud infrastructure. Specifically, demand from AI applications continues to strengthen, driving its overall revenue outlook from AI for this fiscal year even higher than previously stated. Marvell strategic focus on data infrastructure across a diverse array of end markets is serving the company well, despite an uncertain macroeconomic environment.

The key highlights of Marvell’s Fiscal Q3 2024 Financial Outlook include:

  • Net revenue is expected to be $1.400 billion +/- 5%
  • GAAP gross margin is expected to be 45.6%-48.0%
  • Non-GAAP gross margin is expected to be 60.3%-61.3%
  • GAAP operating expenses are expected to be $666 million-$671 million
  • Non-GAAP operating expenses are expected to be $435 million-$440 million
  • Basic weighted average shares outstanding are expected to be 863 million
  • Diluted weighted average shares outstanding are expected to be 869 million
  • GAAP diluted loss per share is expected to be $(0.07) +/- $0.05 per share
  • Non-GAAP diluted income per share is expected to be $0.40 +/- $0.05 per share

From our view, Marvell is firmly positioned to meet its fiscal Q3 2024 guidance. For instance, in August 2023, Marvell unveiled Orion, its 800 Gbps coherent digital signal processor (DSP) for pluggable modules designed to change the economics and performance of the transport networks connecting carrier and cloud assets over extended geographic areas.

Marvell also introduced COLORZ 800 incorporating Orion 800 Gbps coherent DSP and field-proven silicon photonics platform, which integrates multiple discrete components into a single die, providing up to 800 Gbps of bandwidth for DCI links up to 500 km. COLORZ 800 can also be enabled for connections up to 1,200 km operating at 400/600 Gbps to replace traditional transport equipment across a greater range of cloud infrastructure.

We expect that Marvell’s COLORZ 800 offering can energize uptake of coherent dense wavelength-division multiplexing (DWDM) by offering the same size as 800G gray optics and providing an integrated amplifier in ZR+ that can deliver top competitive cost and energy savings per GB. Through enabling more versatile, speedier DCI capabilities, COLORZ 800 is primed to play an instrumental role in the expansion of virtual hyperscaler data centers, especially in assuring more efficient AI processing as well as improved dynamic load balancing.

Moreover, Marvell’s 5 nm multi-gig PHY platform is based on optimized circuit designs, custom digital logic, enhanced digital signal processing (DSP) algorithms, and other innovations to deliver 10 Gbps performance at half the power of previous-generation devices from Marvell. The platform is developed to serve as the building block for additional standalone PHYs, integrated SoCs, and custom ASICs optimized for specific markets and applications.

The Alaska M 3610 Ethernet PHY, the first chip based on the new platform, is a single-port, multi-gigabit PHY built to enable the multi-gigabit backhaul links that are key to improving Wi-Fi performance. Wi-Fi 7 can provide over four times the maximum aggregate data rate of Wi-Fi 6 and 6E and nearly seven times the rate of Wi-Fi 5, a leap in performance that can enable more reliable connections.

Plus, in June 2023, Marvell introduced its Brightlane Q6223 switch designed to deliver 90 Gbps of bandwidth, nearly a twofold increase in capacity of currently-available automotive switches. Marvell is targeting the automotive manufacturers’ tectonic shift from architectures built around domain networking implementations, where switches manage devices linked to specific applications such as infotainment or safety, and point-to-point connections, to zonal networking architectures developed around more scalable and universally proven Ethernet.

We anticipate that the transition to zonal networking architectures can bolster the onboard computing capabilities of vehicles by improving safety systems, augmenting infotainment, boosting fuel efficiency, and smoothly integrating software-defined services for a better driving and passenger experience. To advance the transition toward the zonal approach, Marvell is playing an integral role in rethinking the technology used to develop and build vehicle network platforms.

Marvell Fiscal Q2 FY 2024: Key Takeaways

Overall, we believe that Marvell’s portfolio is solidly aligned with the topmost priorities across the AI and cloud spheres, especially as hyperscalers ramp up their demand for AI-related chips, such as custom ASICs, that can fulfill the burgeoning demands of AI workloads. Such demand can also pull through key Marvell offerings such as Orion 800/COLORZ 800 coherent DSP offerings, particularly as Marvell works through inventory digestion and headwinds in the enterprise and 5G market segments.

Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed Marvell’s earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

Other insights from The Futurum Group:

Futurum Tech Webcast — A Light on Cloud Infrastructure: How Marvell is Scaling AI with New Optical DSP

Marvell Breaks on Through to the 3nm Process Realm

Marvell Fiscal Q4 2023 & FY 2023: Delivers Record Revenue in Fiscal 2023; Cloud-led Data Center Revenue Flourishes

Author Information

Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.

He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.

Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.

Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.

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.

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