Semiconductor manufacturer Marvell Technology Inc. rode the wave of artificial intelligence demand to deliver solid earnings and revenue in its first quarter, but its stock fell a bit after-hours on a day when many other tech companies saw massive declines.

The company reported earnings before certain costs such as stock compensation of 24 cents per share, a penny above its own forecast and in line with Wall Street’s forecasts. Revenue for the period fell 12% from a year earlier, to $1.16 billion, but came in above the consensus estimate of $1.15 billion. It also reported an adjusted gross margin of 62.4%, which fell within its forecast range of 62% to 64%.

The strong results meant Marvell was able to improve its bottom line, posting a net loss of $215.6 million for the quarter, up from a $392.7 million loss in the same period one year ago.

The company is a major player in the world of data storage, networking and automotive chip manufacturing. It’s primary customers are cloud computing providers, telecommunications firms and car manufacturers. Although it’s much smaller than rival chipmakers such as Intel Corp. and Nvidia Corp., Marvell is well-established in the industry and is benefiting from the high demand for silicon that can power artificial intelligence workloads.

The star performer in the quarter was Marvell’s data center business, which saw revenue jump 87% from a year earlier, having grown by 54% in the prior quarter.

AI momentum helped to relieve the pressure on the rest of Marvell’s business segments, which showed declines across the board. For instance, enterprise networking revenue fell 58%, to $153 million, while carrier-infrastructure sales declined by an alarming 75%, to $72 million. Consumer revenue dropped by an equally worrying 70%, to just $42 million, while automotive and industry chip sales were 13% lower, at $78 million.

Not surprisingly, Marvell Chief Executive Matt Murphy (pictured) was keen to highlight the healthiest part of the company’s business, saying that its revenue beat was driven by “stronger-than-forecasted demand from AI.” He said data center demand was driven by a “ramp in our custom AI programs,” which complement its already substantial base of electro-optics revenue.

“For the second quarter of fiscal 2025, we are guiding an 8% sequential increase in revenue at the midpoint,” Murphy said, adding that this growth will be fueled by custom AI silicon. “We see a favorable setup for the second half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carrier infrastructure.”

Marvel is guiding to revenue of $1.25 billion in the second quarter, give or take 5%. That’s slightly above the Street’s consensus estimate of $1.22 billion. The company also sees earnings of 29 cents per share, edging the Street’s forecast of 28 cents per share in second-quarter earnings.

Holger Mueller of Constellation Research Inc. said Marvell did well in the quarter, notably reducing its overall loss despite the drop in revenue. “The management seems to have foreseen the drop in revenue and responded by taking out almost $60 million in operating costs to compensate, without reducing its R&D spend,” the analyst pointed out. “Going forward, the task for Matt Murphy and team is to improve on that by building on the demand for its custom AI chips. They seem to think they can do it, as the plan is to keep operating costs constant while growing revenue by $90 million. If it can do that, it would almost half its overall net loss in the next quarter.”

Although the performance and guidance were solid overall, Marvell’s stock was down more than 4% in after-hours trading.

Photo: Marvell Technology