U.S. semiconductor company Marvell’s (MRVL) shares have surged about 58% year-to-date and have a Strong Buy rating. Yet, they carry a 6% downside risk even as analysts remain bullish on Marvell’s opportunity in the artificial intelligence boom.
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Nvidia Tie-Up May Not Shield Marvell Stock
Late last month, Marvell’s shares surged after chip design giant Nvidia (NVDA) took a $2 billion stake in the U.S. semiconductor company and also signed a strategic partnership with the firm.
The collaboration, which opens up Nvidia’s hardware to work with Marvell’s custom AI chips, earned praise from Wall Street. For instance, Stifel analyst Tore Svanberg noted the deal’s likely impact on Marvell’s revenue from its custom application-specific integrated circuit (ASIC) and optical hardware business.
Why Analysts Remain Bullish on Marvell
The latest review from analysts shows that they remain bullish on Marvell. On Wednesday, Oppenheimer’s five-star analyst Rick Schafer maintained his Outperform (Buy) rating on MRVL and lifted his price target by 13% to $170, predicting about 27% upside.
Schafer hosted an investor meeting with Marvell’s management and found their tone “unequivocally bullish.” The analyst noted that the U.S. semiconductor company expressed confidence in its future growth acceleration.
Marvell sees this being powered by its networking solutions for data centers and AI customers as well as its ASIC portfolio. Moreover, Schafer noted that Marvell appears set to maintain or expand its share of the core networking markets.
Similarly, B. Riley’s Craig Ellis, who is also a five-star analyst, this week reaffirmed his Buy rating on MRVL and elevated his price target by 16% to $156, suggesting roughly 17% upside.
Ellis noted that Marvell could enjoy “lateral benefits” from chip foundry giant TSMC’s (TSM) updated supply chain sales for March. The analyst noted that this update provides a clearer look into demand in the first quarter of this year and early insight into the second quarter.
Is Marvell a Good Stock to Buy Now?
Analysts on Wall Street generally consider Marvell’s shares a Strong Buy. However, while some see up to 27% upside, others have predicted a potential fall by about the same measure.
Moreover, the average MRVL price target of $125.32 leaves about 6% potential downside on the table.
