Marvell shares surge on Huang endorsement as valuation risks mount
Nvidia CEO’s Computex comments drive stock higher, but heavy reliance on hyperscalers and supply chain constraints temper enthusiasm.
Marvell Technology shares climbed approximately 32% in regular trading and a further 12% in after-hours sessions following comments by Nvidia CEO Jensen Huang at Computex in Taipei. Huang described the company as a potential future trillion-dollar chip maker, an endorsement that added an estimated $70 billion to Marvell’s market capitalisation and pushed the stock price to around $325 per share.
The valuation surge has accelerated significantly, with the company now trading at more than 80 times forward FY27 earnings and roughly 53 times estimated FY28 earnings. This represents a sharp increase from approximately 22 times earnings a year ago, a multiple that analysts say prices in near-flawless execution and assumes sustained, exceptional strength in AI infrastructure spending.
Despite the market enthusiasm, structural risks remain prominent. Marvell’s custom ASIC business relies heavily on a small number of hyperscaler customers, primarily Amazon, Microsoft, and Google, with data centre revenue accounting for about 74% of total sales. The company’s filings specifically warn that these customers could reduce their reliance on Marvell through vertical integration, with Amazon already designing its own Trainium chips through its Annapurna Labs division.
Inventory risks also pose a threat to the growth narrative. Large customers may have over-ordered chips, leading to potential inventory corrections and deferred orders in 2026 and 2027. This risk is amplified by broader constraints in the AI build-out, including power availability, grid connections, and data centre construction timelines, which could slow infrastructure spending even if underlying demand remains strong.
Furthermore, Marvell faces lower structural margins compared to peers such as Broadcom and Nvidia. While Broadcom generates roughly 60% non-GAAP operating margins and Nvidia’s margins reached about 65%, Marvell’s adjusted operating margins sit in the mid-30s due to its hardware-focused model. As a fabless company, Marvell also relies entirely on TSMC for advanced manufacturing and CoWoS packaging, exposing it to geopolitical tensions and capacity constraints as it competes for scarce leading-edge resources alongside giants like Apple and AMD.
