This article first appeared on GuruFocus.
Marvell Technology Inc. (MRVL, Financials) is already cashing in big on the AI boom. The next best thing, perhaps, is to move all that info faster.
Second-quarter revenue skyrocketed 37% to a record $2.74 billion. Data-center sales soared 46% to $2.17 billion. Today, the business makes up approximately 80% of Marvell’s sales. And still the demand is rising.
Management forecasts about $3.15 billion in revenue in the third quarter as bespoke AI chips, optical goods and networking equipment continue to expand. What’s intriguing is what comes next.
As artificial intelligence systems get bigger, old copper connections have problems with distance, power consumption, and bandwidth. That’s driving data centers toward optical connections that transmit information via light.
Marvell has invested substantially to gear up for that transition. Its acquisition of Celestial AI brought Photonic Fabric technology to more efficiently connect big artificial intelligence systems.
Marvell expects the business to be running at a $500 million annualized revenue pace by the end of fiscal 2028, and $1 billion the year after that. That growth is not a sure thing. But Marvell’s already got the AI customers.
Now it is betting that the method those customers link their chips will be as valuable as the chips themselves. The next catalyst is Oct. 6 when Marvell hosts its investor day.