Markets Slide as Fed Meeting Looms
Marvell Technology Inc. has experienced a significant decline in its stock price following serious concerns about its relationships with major customers. The company’s shares fell by 9% recently, triggering alarm among investors.
Loss of Major Contracts
New reports indicate that Marvell has likely lost its custom chip design business with Amazon, one of its largest clients. According to Benchmark analyst Cody Acree, this transition to competitor Alchip affects both Amazon’s Trainium3 and Trainium4 designs. These developments prompted Acree to downgrade Marvell’s stock rating from “buy” to “hold.”
Impact from Microsoft
Additional pressure comes as Microsoft, Marvell’s second-largest custom chip buyer, reportedly considers shifting its business to Broadcom. These decisions have raised significant questions about Marvell’s future prospects.
Mixed Analyst Opinions
While Acree is pessimistic about Marvell’s outlook, some analysts remain optimistic. Harlan Sur from JPMorgan expressed skepticism about the loss of Amazon’s business, highlighting Marvell’s acquisition of Celestial AI as a strategic advantage. Sur believes it aligns with Amazon’s future chip design requirements.
CEO’s Assurance
During a recent earnings call, CEO Matt Murphy addressed concerns regarding Marvell’s role in future chip developments. He emphasized that the company has a clear product transition strategy in place. Despite the uncertainty, Murphy reassured investors about their existing backlog and order visibility.
Future Expectations
Acree noted that Marvell’s revenue expectations may rely heavily on continuing volumes from Trainium2 and a project with Kuiper, rather than the anticipated success of the Trainium3 designs. This uncertainty casts doubt on the company’s ability to recover from its current downturn.
- Stock Decline: Marvell shares down 9% recently.
- Major Clients: Amazon and Microsoft are key custom chip buyers.
- Analyst Ratings: Benchmark downgraded from “buy” to “hold.”
- Future Earnings: Reliance on Trainium2 and Kuiper projects remains uncertain.
