Marvell Technology stock has slumped since June 18 as investors dumped popular semiconductor companies. After peaking at $329, it has now plunged by 35% to the current $217, with its valuation falling from $277 billion to the current $185 billion. This price action may continue in the near term as investors focus on the upcoming earnings on August 27.
Marvell Technology earnings to determine the next move
MRVL stock has been under pressure in the past few months, mirroring the performance of other top companies in the semiconductor industry.
For example, the iShares Semiconductor Sector Index Fund (SOXX) has dropped by over 18% from the year-to-date high. The VanEck Semiconductor ETF (SMH) has dropped from a high of $671 to $572.
The retreat happened as investors booked profits after the industry staged a strong rally amid the ongoing AI boom. This retreat has faded after most companies in the tech industry, including its customers, released strong results and committed to more spending.
The next main catalyst for the MRVL stock will be its earnings, which are expected to come in on August 27. Its most recent results revealed that its revenue jumped by 28% in the first quarter to $2.4 billion, with its data center segment contributing $1.8 billion. Its communications segment brought in $585 million.
The management believes that its AI business will drive growth through FY’28, with demand for its solutions continuing seeing strong demand. As a result, the company’s guidance for the upcoming earnings is expected to grow by 35% to $2.7 billion.
For the year, it expects that its data center revenue will soar by 50%, with its FY’28 revenue being $16.5 billion. This growth explains why Nvidia made a big investment in the company, with Jensen Huang arguing that it will be the next $1 trillion company.
MRVL valuation and analysts’ estimates
In addition to Huang, other top analysts are highly bullish on the company. KeyCorp’s John Vinh boosted the target from $385 to $400, while RBC’s Srini Pajjuri hiked his target to $360. The consensus estimate among analysts is that it will hit $245, up by 15% from the current level.
The main concern among analysts is that the company has become highly overvalued, which may affect its upside. It trades at a forward price-to-earnings ratio of 52.41, much higher than the sector median of 23. It is also higher than that of other top companies like Nvidia, Micron, and Western Digital.
Marvell stock technical analysis
MRVL stock chart | Source: TradingView
The daily chart shows that the MRVL stock has rebounded after bottoming at $162.93, its lowest level on June 29. Its lowest level coincided with the 200-day Exponential Moving Average (EMA) and the 61.8% Fibonacci Retracement level.
There are signs that the stock has formed an inverted head-and-shoulders pattern, a common bullish reversal sign. Therefore, the stock will likely continue rising as bulls attempt to fill the fair value gap that formed on June 1. A drop below the support level of $162 will invalidate the bullish view.
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