After a string of less-than-impressive earnings results that weighed heavily on its stock, Marvell Technology Inc. headed in the opposite direction today.

The company delivered earnings in line with expectations and revenue that beat Wall Street’s targets, then offered an upbeat outlook for the current quarter, citing ongoing momentum with its artificial intelligence chips.

Marvell’s stock subsequently gained more than 7% in the extended trading session, building on a smaller gain of just over 2% during the regular trading period.

The company reported second-quarter earnings before certain costs such as stock compensation of 30 cents per share, which was bang on with Wall Street analysts’ consensus estimates. Its revenue fell 5% from a year ago, to $1.27 billion, but that was still better than most had feared, with analysts targeting sales of $1.25 billion. All told, the company delivered a net loss of $193 million, down from a wider loss of $216 million in the year-ago period.

Marvell Chairman and Chief Executive Matt Murphy (pictured) told analysts that the company’s revenue grew 10% on a sequential basis due to strong demand for AI, coming in above its own guidance range. “We saw strong growth from our electro-optics products and our custom AI programs began to ramp up,” he said.

The company is a major player in the world of data storage, networking and automotive chip manufacturing. Its 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 AI workloads.

Marvell said its data center revenue increased 92% year-over-year, to $881 million, well ahead of the Street’s forecast of $865 million. The growth was driven primarily by stronger demand for AI chips, aligning with broader industry expectations for AI-driven growth.

The company’s other business segments, enterprise networking and carrier infrastructure, both declined on a year-over-year basis. Marvell attributed this to inventory corrections and lower demand.

On the other hand, it saw a sharp sequential increase in its consumer revenue, and a more modest sequential improvement in the carrier infrastructure business.

Holger Mueller of Constellation Research Inc. said Marvell is has been “limping” on one leg — its data center business — for quite some time and that limp is getting even more noticeable.

“Data center revenue was almost doubled year-over-year but its other four legs — enterprise networking, carrier infrastructure, consumer and automotive — all shrank over the same period,” the analyst explained. “If it were not for AI, things would probably be looking much worse for Marvell and its investors. But there are signs of life in the consumer and carrier segments, which showed growth on a sequential basis. If those segments can continue growing, Matt Murphy and his team might find a way back to profitability.”

Looking to the third quarter, Marvell said it expects revenue to reach $1.45 billion at the midpoint of its guidance range, ahead of the analysts’ call for $1.41 billion. It’s also looking for earnings of 40 cents per share, versus the Street’s target of 38 cents.

“Next quarter, we expect our combined enterprise networking and carrier end markets to return to growth, while our data-center end market growth accelerates,” Murphy said. “As a result, for the third quarter of fiscal 2025, we expect all our end markets to grow sequentially, with consolidated revenue forecasted to grow 14% sequentially at the midpoint, accompanied by a significant increase in operating leverage.”

Photo: Marvell Technology