Shares of Marvell Technology MRVL have surged 154% in the past three months, outperforming the Zacks Computer and Technology sector and the Zacks Electronics - Semiconductors industry’s growth of 26% and 56.9%, respectively.

MRVL Three-Month Performance Chart

The rise in share price has resulted in MRVL stock trading at a forward 12-month price-to-sales (P/S) multiple of 17.42X compared to the Electronics - Semiconductors industry’s P/S multiple of 10.12X. This shows an overvaluation, which is further substantiated by the Zacks Value Score of F.

MRVL Forward 12-Month (P/S) Valuation Chart

This dynamics raises the question: Should investors buy, hold or sell MRVL stock? Let’s discuss the fundamentals in detail.

Traction in AI Data Center Products Drives MRVL Stock

Marvell Technology’s networking business remains a key beneficiary of rising AI cluster size and complexity. Marvell Technology now expects its interconnect business to grow more than 70% year over year in fiscal 2027, supported by scale-out PAM ramp-ups and growing contributions from scale-up and scale-across networking.

Within optics, the company expects TIAs and drivers to exceed a $1 billion annualized run rate in the next few quarters and sees a path to about $1 billion annualized DCI module revenues during fiscal 2028. The company also expects scale-up optics to ramp up in fiscal 2028, reflecting broader adoption across engagements.

MRVL’s scale-out switch revenues are expected to exceed $600 million in fiscal 2027 and reach more than a $1 billion annualized run rate in fiscal 2028. Stronger demand for 1.6T solutions, coherent light and scale-up networking provides a broader opportunity in scale-up optics. Custom silicon is another major growth driver. MRVL said custom revenues remain on track to grow more than 20% year over year in fiscal 2027, led by its flagship XPU program and XPU attach programs in NIC and CXL.

In the first quarter of fiscal 2027, Marvell Technology delivered record revenues of $2.418 billion, and the data center segment accounted for 76% of total revenues. Marvell Technology’s interconnect and switching businesses are showing particularly strong momentum. The company now expects interconnect revenues to grow more than 70% year over year in fiscal 2027.

The growth in the top line has also resulted in improving margins and cash flows, given that MRVL’s focus is on cost control. MRVL delivered a record operating cash flow of $638.8 million in the first quarter of fiscal 2027, almost doubling from $332.9 million reported in the year-ago quarter. The Zacks Consensus Estimate for MRVL’s fiscal 2027 earnings shows 42.3% year-over-year growth. The consensus estimate has been revised upward in the past 30 days.

Stiff Competition in the AI Market Remains a Concern for MRVL

Macroeconomic and geopolitical uncertainties remain a meaningful overhang on Marvell Technology’s near-term performance. Global trade tensions, evolving U.S. chip export restrictions and tariffs create operational and demand-side risks, particularly given MRVL’s reliance on hyperscalers and global supply chains.

Marvell Technology’s rapid growth in AI-driven custom silicon is heavily tied to hyperscalers, creating concentration risk. In the fourth quarter of fiscal 2026, 74% of total revenues came from data centers, with more than 90% of that tied to AI and cloud hyperscaler demand. The company faces stiff competition in the networking and custom silicon space from Broadcom AVGO, Astera Labs ALAB and Advanced Micro Devices AMD.

Broadcom is a leader in the domain of custom silicon solutions for data centers. Broadcom’s advanced 3.5D XDSiP packaging platform is critical to ensure the performance and efficiency of custom AI XPUs. Advanced Micro Devices is another established player in the custom silicon solutions and AI accelerator market.

Advanced Micro Devices offers semi-custom SoCs and Instinct Accelerators to power data centers. Astera Labs’ Leo CXL smart memory controllers are built for memory expansion up to two terabytes and improve interoperability to accelerate AI performance and cloud computing.

Conclusion: Hold MRVL Stock for Now

Marvell Technology continues to benefit from the expanding AI infrastructure market, driven by strong momentum in interconnect, switching, custom silicon and optical networking. Nevertheless, its premium valuation relative to the industry and a highly competitive landscape limit upside in the event of execution missteps. We therefore recommend holding this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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