TLDR
- Marvell gains 3% on record revenue, then dives 11% after weak EPS outlook.
- AI growth fuels Marvell’s Q2, but soft Q3 guidance spooks investors.
- Marvell’s $2B Q2 beats estimates, but EPS miss triggers sell-off.
- Despite AI boom, Marvell sinks post-close on cautious earnings guide.
- Strong AI demand lifts Marvell’s sales, yet Q3 outlook rattles market.
Marvell Technology ended August 28 with a strong showing during market hours, closing at $77.23 after a 3.26% gain. However, sentiment shifted in after-hours trading as the stock dropped sharply to $68.63, reflecting an 11.14% decline.
This movement came despite the company posting record revenue in its second-quarter results for fiscal year 2026.
The semiconductor firm reported $2.006 billion in net revenue for Q2, exceeding its guidance midpoint by $6 million. Non-GAAP net income reached $585.5 million, or $0.67 per diluted share, while GAAP net income stood at $194.8 million, or $0.22 per share. Operating cash flow came in strong at $461.6 million, supporting the firm’s ongoing capital commitments.
Marvell attributed the robust revenue performance to growing demand for its AI-focused custom silicon and electro-optics product lines. The company also noted an accelerating recovery in enterprise networking and carrier infrastructure markets. This mix of AI momentum and market stabilization contributed to a 58% year-over-year revenue increase.
Guidance Signals Concern Despite Growth Momentum
Marvell issued Q3 guidance targeting net revenue of approximately $2.060 billion, 5%, suggesting moderate sequential growth. The company projected non-GAAP earnings of $0.74 per share, which slightly missed market estimates, raising concerns. This softer-than-expected outlook appeared to drive the sharp post-market decline in the stock price.
GAAP diluted earnings are expected to reach $2.03 per share, though the figure includes significant adjustments related to past acquisitions. Operating expenses are projected at $719 million on a GAAP basis and $485 million on a non-GAAP basis, maintaining tight control. Gross margins are also forecasted to improve, with non-GAAP margins expected to range between 59.5% and 60%.
Despite optimistic commentary from leadership, the market responded negatively to the earnings forecast. The disconnect between AI-fueled growth and lower-than-expected EPS guidance likely spooked traders. The response suggests rising expectations tied to AI exposure may be heightening scrutiny around tech-sector earnings.
AI Expansion Continues but Pressure Mounts
Marvell emphasized the ongoing demand for AI-related solutions, particularly for custom silicon and infrastructure applications. The company reported engagement in over 50 new AI design opportunities spanning more than 10 customers. Such activity signals continued long-term upside, especially in enterprise and hyperscale markets.
Short-term market reactions indicate rising pressure to translate AI momentum into consistent earnings growth. Even with a strong performance in Q2, expectations appear to be outpacing near-term financial outcomes. This reflects broader challenges faced by AI-exposed chipmakers navigating investor enthusiasm and real-world delivery.
