Marvell’s 40% Drop Presents a Compelling Buying Opportunity
One of the AI darlings of the stock market in 2024, Marvell Technology (NASDAQ: MRVL), has fallen on its face in 2025. After rising 83% in 2024, the stock is down 40% this year through Mar. 10. Despite beating expectations in its latest earnings report, the stock dropped nearly 20% afterward.
Additionally, a generalized sense of fear currently gripping much of the stock market has hurt this company. The more sensitive tech sector is getting hit especially hard. As of the Mar. 10 close, the Technology Select Sector SPDR Fund (NYSEARCA: XLK) is down 14% from its Feb. 19 high. This puts the sector in solid correction territory.
Despite all this, Marvell's numbers don’t lie; the company is performing well and playing an important role in data centers and AI. So, is it possible that Marvell shares are now trading at a significant discount? Or is this name too risky as recession fears rise?
Markets on MRVL Earnings: Good, But No Cigar
Marvell hit its mark in fiscal Q4 2025. Its sales and adjusted earnings per share (EPS) both came in 1% to 2% higher than expected. Revenue and adjusted EPS guidance also came in just barely over expectations at the midpoint. Its guidance range for revenue was plus or minus 5% either way, while adjusted EPS had a range of plus or minus 8%.
The company saw impressive growth in its data center business of 88% in 2024. Meanwhile, all of its other end markets showed precipitous declines. Overall, the firm is forecasting 61% revenue growth next quarter from the prior year quarter. It expects adjusted EPS to rise 154%. Still, markets were hoping for even more positive guidance, leading to a sell-off.
MRVL: Highly Risky in Downturns, But AI-Spending Could Provide a Lifeboat
When looking at a stock like Marvell now, it's helpful to check its past performance during periods of negative market sentiment. The last bad year for tech stocks came in 2022 when XLK declined by 28%. That year, Marvell more than doubled down on XLK's losses, dropping a staggering 58%.
However, it is also important to recognize how Marvell’s business has shifted over that time. In 2022, Marvell ended the year with around $5.9 billion in revenue. That year, 41% of total revenue came from its data center end market. For 2024, revenues were just under $5.8 billion. However, the makeup of that revenue number is now significantly different, with data centers accounting for over 72% of the total.
This is important to know as markets worry about a potential recession. Cyclical demand is much more likely to drive the company’s other four end markets outside of data centers in the current environment. This is particularly true when looking at consumer, automotive/industrial, and enterprise networking. Demand in these markets is likely to shift more dramatically based on consumer demand, which is strongly correlated with recession.
Meanwhile, although it is unclear who Marvell’s data center customers are exactly, we know they are big tech hyperscalers. Overall, these companies announced plans to invest over $300 billion in AI infrastructure in 2025. Luckily for Marvell, this is the part of their business that is by far the most important right now. Even if there is a recession, are these cash-flushed companies going to renege on these commitments? With so much momentum moving in one direction, it's hard to see this happening.
MRVL: A Volatile AI Stock to Watch Amid Market Uncertainty
Marvell's revenues may be significantly less prone to recession, given the current environment, than they were in the past. However, that doesn’t mean the stock won’t continue dropping. There is a high level of uncertainty in the market right now. Tariffs and government funding policies change almost daily, which spooks the markets. Markets will likely continue to trade down sensitive tech stocks like Marvell until uncertainty decreases significantly.
However, its large drop in value, combined with its strong position in the AI space, makes it a key stock to watch. Increased certainty the impact of Trump policies will hopefully start to manifest soon. This could lead to a more stable market environment. At that point, there could be a significant opportunity in shares of Marvell Technology.
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