Marvell Technology (MRVL) stock is down 36% from its all-time high hit one year ago as concerns about competition from hyperscalers and the potential loss of customers weighed on the stock. Investors worried that giants like Google, Amazon (AMZN), and Microsoft (MSFT) would rely more on in-house ASICs, sidelining Marvell’s custom silicon and networking chips. Those fears hammered the shares even as the AI boom lifted the broader semiconductor sector.

Yet Marvell just turned in a stellar earnings report for fiscal 2026 on Thursday and sharply raised its guidance, sparking a stock surge. With AI a powerful growth driver for MRVL, is this stock a hidden gem to buy now?

Data Center Boom Delivers Record Results
Marvell closed fiscal 2026 with revenue of $8.2 billion, a 42% jump from the prior year. The star performer was the data center segment, which generated more than $6 billion – up 46% year-over-year – and accounted for roughly 74% of fourth-quarter revenue. Demand for high-speed interconnect, Ethernet switching, and custom silicon solutions exploded as cloud hyperscalers scaled AI training and inference clusters.

Fourth-quarter revenue hit a new high of $2.219 billion, rising 22% year-over-year and 7% sequentially. Non-GAAP earnings per share came in at $0.80, edging past expectations, while full-year non-GAAP EPS surged 81% to $2.84. Gross margins remained rock-solid at 59% non-GAAP, reflecting the premium pricing power of AI-optimized products.

The company also posted record design wins across its portfolio, signaling multi-year revenue visibility. After the fiscal year closed, Marvell completed two strategic acquisitions – Celestial AI and XConn Technologies – to accelerate its AI scale-up networking roadmap. These deals bring advanced optical interconnect and high-radix switching technology, with initial revenue contributions expected in fiscal 2028.

Guidance and Valuation Paint a Compelling Picture
Marvell’s outlook is even more bullish. First-quarter fiscal 2027 revenue is guided to $2.4 billion, already topping Street estimates. Full-year revenue is projected near $11 billion, implying more than 30% growth, with data center sales expected to accelerate over 40%. By fiscal 2028, management sees revenue approaching $15 billion and non-GAAP EPS topping $5.

Despite the post-earnings pop, MRVL trades at attractive multiples. The stock boasts a low PEG ratio thanks to analysts forecasting 42% compound annual EPS growth over the next five years. When a company growing earnings that fast still carries a reasonable valuation, the margin of safety for long-term investors expands dramatically.

The Bottom Line
It wasn’t that long ago that analysts were raising red flags about possible customer defections, with sites like The Information reporting Microsoft may switch to rivals like Broadcom (AVGO). While the possibility can’t be dismissed, as big tech continues pouring billions into custom silicon, and any meaningful share loss would hurt. But right now those risks are not material.

Data center demand is exploding, design wins are piling up, and guidance points to sustained growth. With the business booming and valuations still compelling, Marvell Technology looks like an AI hidden gem worth buying today.

— Rich Duprey

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Source: Money Morning