The business behind the hype

Nvidia CEO Jensen Huang publicly backed Marvell Technology during an onstage appearance at the Computex conference in Taipei last week, declaring the chip designer could become the next trillion-dollar company. His endorsement triggered a 32% one-day stock surge, the largest in Marvell’s history, before a 16% drop in a sector-wide sell-off on Friday. The stock later rebounded toward $300 after Marvell’s inclusion in the S&P 500 but fell over 11% by Tuesday, despite tripling in value for 2026 alone. Marvell designs high-speed data center chips critical for AI infrastructure, with data center revenue surging from 40% of total sales in fiscal 2024 to 76% in the first quarter of 2027. The company reported record fiscal 2026 revenue of $8.2 billion, up 42% year-over-year, driven by a 47% increase in data center sales to $6.1 billion. Fiscal Q1 2027 revenue rose 28% to $2.42 billion, with data center revenue growing 27% to $1.83 billion. CEO Matt Murphy highlighted accelerating demand for Marvell’s interconnect products, projecting over 70% growth in that segment for fiscal 2027. He also emphasized deeper collaboration with Nvidia on custom silicon and optical networking. However, Marvell’s market cap remains at $225 billion, requiring a quadrupling to reach $1 trillion—a target critics call unrealistic given its current valuation of nearly 90 times adjusted earnings. The company’s growth relies heavily on a small group of cloud customers investing in custom AI chips. A slowdown in spending or a shift away from Marvell’s technology could derail its trajectory. While Huang’s endorsement adds credibility, the stock’s volatility underscores the risks of overestimating long-term potential based on short-term hype.