Wall Street’s bets on AI infrastructure continue to heat up, with several major investment banks recently raising their target prices for data center chip giant Marvell Technology (MRVL). UBS made the most striking move, hiking its target from $230 to $340 (approximately NT$10,900), implying nearly 39% upside potential, drawing significant market attention.

In his latest report, UBS analyst Timothy Arcuri maintained a “Buy” rating on Marvell and raised the target price by nearly 48%. Around the same time, Bank of America set a $365 target, Stifel raised its target to $350, and B.Riley assigned a $345 target, specifically highlighting the value of Marvell’s collaboration with Nvidia. The synchronized bullishness from multiple institutions signals a strong market consensus on Marvell’s strategic positioning in CXL high-speed interconnect technology and its breakthroughs in next-generation AI networking chips.

3nm Teralynx T100 Debuts as Core Catalyst for Valuation Re-rating

UBS explicitly pointed out in its report that the Teralynx T100 Ethernet switch chip, launched by Marvell in early June, is the key catalyst driving this valuation re-rating. This is the world’s first monolithic 102.4 Tbps switch chip designed from the ground up for the AI era. Manufactured using TSMC’s 3nm process, its typical power consumption is under 1,000W, achieving up to 25% energy savings compared to competing products.

In an environment where AI data center rack power is approaching 120kW and networking components account for 15% to 25% of total power consumption, low-power switches have shifted from a “nice-to-have” to a strategic necessity. The Teralynx T100 is designed for large AI clusters, enabling flatter, high-radix switch architectures supporting up to 512 ports. It offers multiple packaging options, including BGA, co-packaged copper (CPC), and co-packaged optics (CPO), while being compatible with the emerging ESUN protocol and Ultra Ethernet Consortium specifications.

Rishi Chugh, Vice President and General Manager of Marvell’s Data Center Switch Business Unit, stated: “Teralynx T100 is purpose-built for AI—it carries no legacy design baggage that adds power, and it has been meticulously engineered to deliver the deterministic performance and efficiency required to scale next-generation data center infrastructure.” The chip is currently being sampled to customers and is viewed by the market as a landmark product marking Marvell’s transformation from a traditional semiconductor supplier to a critical player in AI infrastructure.

CXL Market Seen Reaching $10 Billion; Marvell Secures Five Key Projects

Beyond the Teralynx T100, the deeper logic behind UBS’s target price hike lies in its bullish outlook on the impending inflection point for CXL (Compute Express Link) high-speed interconnect technology. CXL is a high-bandwidth interconnect standard built on PCIe, featuring cache coherence and low latency. It enables efficient data sharing and resource scheduling among CPUs, GPUs, AI accelerators, and memory pools, and is considered a foundational technology for next-generation AI server architectures.

UBS predicts the global total addressable market (TAM) for CXL will reach approximately $4.5 billion (about NT$140 billion) by 2027, further expanding to between $7 billion and $10 billion (about NT$220 billion to NT$320 billion) by 2030. Marvell currently holds a leading share in CXL products, with its business spanning three major segments: traditional interconnects, XPU-attach, and CXL switch chips. XPU-attach is expected to become the primary revenue driver.

According to information obtained by UBS, Marvell has already secured five XPU-attach projects from two leading U.S. hyperscale cloud service providers, including custom chip orders related to Google’s TPU. Based on this, UBS estimates that Marvell’s CXL-related revenue will double from approximately $1 billion (about NT$32 billion) in 2027 to roughly $2 billion (about NT$64 billion) in 2028.

Driven by the strong outlook for its CXL business, UBS significantly raised its financial forecasts for Marvell. The 2027 revenue estimate was increased from $16.5 billion to $16.8 billion (about NT$540 billion), and the 2028 forecast was hiked from $21.9 billion to $23.9 billion (about NT$770 billion). Earnings per share (EPS) estimates were also raised from $6.09 and $8.60 to $6.23 and $9.62, respectively.

Data Center Revenue Hits 76% Share; Record Cash Flow

Marvell’s latest earnings report provides solid fundamental support for this optimistic outlook. For the first quarter of fiscal year 2027, ended May 3, 2026, the company delivered record revenue of $2.418 billion (about NT$77 billion). Data center revenue reached $1.833 billion (about NT$59 billion), up 27% year-over-year, accounting for a substantial 76% of total revenue. Non-GAAP gross margin was 58.9%, and trailing twelve-month revenue growth hit 34%.

Cash flow performance was equally impressive. The company generated a record $638.8 million (about NT$20 billion) in operating cash flow during the quarter, nearly doubling from $332.9 million (about NT$11 billion) in the same period last year. The company recently appointed Dan Durn as its new Chief Financial Officer (effective June 15) and declared a quarterly dividend of $0.06 per share, demonstrating strong confidence in its cash flow generation.

Looking ahead, Marvell’s business growth guidance is robust: its interconnect business is expected to grow over 70% year-over-year in fiscal 2027; scale-out switching revenue is projected to exceed $600 million (about NT$19 billion) in fiscal 2027, reaching an annualized revenue run rate of over $1 billion in fiscal 2028; and custom chip revenue is expected to grow over 20% year-over-year, with growth accelerating to over 100% in the following fiscal year.

Competitive Landscape: The ASIC Battle with Broadcom

In the AI networking and custom chip space, Marvell faces intense competition from Broadcom (AVGO) and AMD. Broadcom remains the leader in data center custom chip solutions, with an estimated market share of up to 70%. Its advanced 3.5D XDSiP packaging platform is crucial for ensuring the performance of custom AI XPUs. Industry analysis suggests Broadcom is favored to capture 60% of the global custom AI chip market by 2027.

However, market signals indicate that Marvell is gradually eroding Broadcom’s market share. Some analysts believe that, with support from Nvidia, companies like Marvell and MediaTek are quietly chipping away at Broadcom’s ASIC market share. Marvell expects its custom AI chip revenue to grow 20% this fiscal year, with growth accelerating to over 100% next fiscal year, demonstrating strong momentum in its catch-up efforts.

Potential Risks Amid High Valuation

Despite the bright outlook, analysts still caution investors about potential risks. Marvell currently trades at a price-to-earnings ratio of about 91x, with its stock up over 200% over the past year. The high valuation already prices in a significant degree of optimism, creating short-term profit-taking pressure. Furthermore, the pace of CXL standard adoption, the capital expenditure rhythms of hyperscale cloud providers, and competitive responses from rivals like Broadcom and Astera Labs (ALAB, for which UBS simultaneously raised its target from $205 to $400 while maintaining a Neutral rating) could all impact the timeline for Marvell’s market share realization.

UBS, however, believes that as CXL evolves from single-CPU memory expansion to rack-level coherent fabrics connecting CPUs and XPUs, combined with the Teralynx T100’s penetration in AI networking, Marvell is well-positioned to gradually grow into its current high valuation, backed by its custom silicon capabilities and first-mover customer stickiness. Investors should closely monitor the shipment progress of XPU-attach projects like Google’s TPU, as well as changes in AI infrastructure capital expenditure guidance from global technology giants.