Author: Rita
Tide Guide
Morgan Stanley analyst Joseph Moore updated his research report on Marvell (MRVL) on May 28. Following a record quarterly earnings report and significantly raised full-year guidance from management, Wall Street has overwhelmingly adopted a bullish stance. Moore is among the few who did not follow suit, maintaining a neutral equal-weight rating while raising his price target from $172 to $195—both increases still below the current stock price. He acknowledges that the AI opportunity is real, but believes the current price already fully reflects it. Investors holding MRVL or seeking exposure to the AI chip and optical interconnect ecosystem would benefit from understanding the rationale behind this contrarian perspective. We’ve distilled and interpreted his key points.
Three key conclusions
① Record quarterly results lead management to significantly raise full-year guidance. Revenue for the quarter ended April 2026 (Marvell’s first fiscal quarter of 2027) reached $2.418 billion, up approximately 28% year-over-year and slightly exceeding market expectations of $2.406 billion. Earnings per share were $0.80, in line with estimates. More importantly, management raised its full-year FY27 revenue guidance to approximately $11.5 billion, representing about 40% growth, and further increased FY28 guidance to approximately $16.5 billion, or about 45% growth. The midpoint of next quarter’s revenue guidance is $2.7 billion, up 35% year-over-year and exceeding market expectations by approximately $100 million.
② Moore maintains a Neutral rating because the stock price has already priced in growth. A $195 target price implies approximately 40 times the expected earnings per share for calendar year 2027 (including stock-based compensation expenses). Moore compared Marvell to NVIDIA and its preferred shares: both stocks trade at similar levels (~$198 vs. $212), but NVIDIA’s EPS for the next fiscal year is around $13—more than double Marvell’s estimated $6. Moore believes that for Marvell to sustain this valuation, it needs clear evidence of sustained earnings upgrades, market share gains in networking, or certainty around large-scale shipments of custom chips—none of which have materialized yet.
③ AI growth has two legs: one running, one crawling. The fast-moving leg is optical interconnects; Moore significantly raised the FY27 growth forecast from around 50% to over 70%, with the optical module product line expected to reach $1 billion in annualized revenue within the next few quarters. The slower-moving leg is custom AI chips—specialized chips designed for cloud providers. Moore’s confidence in FY28 is growing, but a major new customer won’t begin mass production until FY28, so this revenue is not yet visible.
Equal-weight logic: The opportunity is real, and the price is real.
Moore did not question Marvell’s AI opportunities; he raised all three growth drivers. The issue is that the stock has already moved ahead.
The 40x earnings multiple rests on several simultaneous assumptions: Guanglian continues to scale up, custom chips transition from ramp-up to mass shipment, and storage and enterprise businesses stabilize. If any one of these three fails to materialize, this valuation multiple becomes unsustainable.
Moore specifically compared NVIDIA in his report. The two companies have similar stock prices, but NVIDIA’s earnings per share for the next fiscal year are more than twice that of Marvell, meaning the same amount of money buys a significantly different earnings base. This is one of the core reasons for his neutral rating.
Which stage of the AI chain is Marvell stuck at?
Mellanox doesn’t manufacture GPUs; it enables data transfer between GPUs and between racks. As AI training clusters grow larger, the volume of data that needs to be transmitted between chips increases, putting greater strain on high-speed optical interconnects. This is currently Mellanox’s strongest area, with the highest visibility from Moore—the optical module product line (acquired from Inphi) is expected to reach an annualized $1 billion over the next few quarters. Another growth driver is in-scale optical interconnects within clusters, growing from approximately $150 million to over $300 million.
Custom chips represent another line of logic. Cloud providers, seeking to reduce reliance on a single GPU supplier, are engaging Marvell to design their own AI-specific chips. Moore’s confidence in FY28 is growing, driven by three sources: existing custom chip business, complementary sales, and a new major customer set to begin volume production in FY28. However, volume production is slated for next year, so this revenue is not yet visible this year.
On the other end, storage, enterprise data centers, and traditional networks are still working through inventory reductions, with no clear short-term catalyst for recovery.
What Morgan Stanley is betting on, what it's not betting on, and what it's watching
The bet is that Marvell’s optical interconnect logic holds true and demand for AI data centers remains strong; the raised target price and improved long-term outlook reflect this. The bet is not that the current stock price has further upside potential—Moore has maintained a Neutral rating rather than Overweight.
There are three key signals to monitor: whether the optical module product line can achieve an annualized revenue of $1 billion as scheduled over the next few quarters; whether the new large-customer custom chip project can ramp up to mass production smoothly in FY28; and when signs of recovery will emerge in the storage and enterprise businesses. If any one of these falls short of expectations, the 40x valuation must be reassessed.
This article is a compilation and interpretation by Chaoxiang Research of third-party brokerage research reports. The ratings, target prices, earnings forecasts, and related judgments cited herein are the views of the brokerage's analysts and represent only the position of their respective institutions; they do not reflect the views of Chaoxiang Research nor constitute any investment advice.
When reading, please note three points: First, the target price represents analysts’ expectations for approximately the next 12 months and is a forecast, not a guarantee; it may be adjusted repeatedly based on performance and market conditions. Second, sell-side research reports are inherently bullish, and some covered companies may have investment banking relationships with the brokerage. Third, the value of a report lies in its core logic and underlying assumptions, not in any single target price. Focus on the logic, not just the price.
The market carries risks; make decisions independently. This article should not be used as a basis for buying or selling any securities.
Data sources: Marvell's First Quarter FY2027 Earnings Report (SEC 8-K); Morgan Stanley Research Report (Joseph Moore, May 28, 2026); aggregated public analyst ratings (MarketBeat, GuruFocus, Benzinga)
TideResearch · June 2026