Is this Unknown Chip Company, Named a Top AI Stock for 2024, a Good Investment Opportunity?

HTML tags allows me to create a web page.

Article Summary

Nvidia, the GPU designer, achieved great success in 2023 due to the lasting impact of AI hype. Their stock has taken off and garnered significant attention from the public. Marvell Technology, a lesser-known company, was named the top specialty chip stock for 2024 by Citi analyst Atif Malik. Despite not being at the center of the AI movement, Marvell is projected to have promising growth opportunities.

Marvell’s stock rose following NVIDIA’s success as it supplies specialty chips used to string together GPU-powered systems for AI training. However, its revenue has begun to decline since then. Citi’s optimistic outlook is the main reason for the market’s high expectations for Marvell. While AI networking chips could contribute greatly to its sales in the present year, other markets, including non-AI data centers and cloud services, are currently in decline for Marvell.

In a recent report, CAAS Table details Marvell’s revenue and year-over-year changes in fiscal Q3 2024. Although the revenue for the Data Center segment saw a decline, there are expectations that the declining end markets will soon bottom out. This outlook, along with the CEO’s comments, has contributed to the positive sentiment around Marvell’s future prospects.

However, the company’s various revenue streams, particularly mobile infrastructure and automotive businesses, now face an uncertain outlook. This could be a factor in the company’s declining revenue. Despite a 40% surge in the last three months, investors may need to exercise patience.

The stock is currently trading at over 70 times trailing-12-month free cash flow and it has surged by over 40%. Prospective investors may want to consider initiating a small-dollar cost averaging plan to build a position in the company.

There are merits to investing in Marvell, it might be advisable for most investors to exercise caution and be patient. It’s also worth noting that Marvell was not included in a list of the “10 best stocks” identified by a leading analyst team that could potentially yield significant returns in the coming years. Therefore, investors may want to consider other potential opportunities.

Leave a Reply

Your email address will not be published. Required fields are marked *