Marvell Technology’s shares rose 23% on Friday as the chipmaker forecast a strong revenue boost from the AI boom, following larger peer Nvidia Corp (NVDA.O).
Investors sought AI exposure to offset weaknesses in many IT companies’ traditional services and products, adding over $10 billion to Marvell’s market value.
“Generative AI is rapidly driving new applications and changing the investment priorities for our cloud customers,” Marvell CEO Matt Murphy said on the post-earnings call, referring to one of the company’s main sectors.
He added the technology refresh rate for AI infrastructure is 18 to 24 months, compared to four years for normal infrastructure.
The business predicted AI-based sales would treble this year on Thursday.
On Wednesday, Nvidia forecasted second-quarter sales of more than 50% over Wall Street estimates and said it would have more AI chips in the year’s second half, driving its shares up 24% on Thursday.
At least 17 brokerages boosted Marvell’s price targets, raising the median to $65, representing a 31% upside to the stock’s latest close.
“The results/guidance confirms the team is moving past the trough of this downcycle,” J.P. Morgan analysts said. The brokerage anticipates 5G, auto, and AI-based goods to counterbalance enterprise networking, wired carrier, and legacy data center difficulties.
Microsoft Corp. (MSFT.O) and Alphabet Inc. (GOOGL.O) are adding AI technology to their products to improve demand in a poor economy.