Marvell stock slides as muted AI outlook offsets solid Q2 earnings

Marvell Technology  (MRVL) - Get Free Report shares slumped lower in pre-market trading Friday after the chipmaker issued a muted near-term outlook that clouded solid second quarter earnings.

Marvel said adjusted profits for the three months ending in June fell 42.1% from last year to 33 cents per share, but came in a penny ahead of Street forecasts. Group revenues, Marvell said, fell 8% to $1.34 billion, narrowly topping analysts' estimates of a $1.33 billion tally.

Marvel said current quarter revenues would likely hit $1.4 billion, representing a year-on-year decline of around 9%, with gross margins narrowing to around 38.9%. That said, AI demand its likely to continue to drive sequential revenue gains that are higher than previously anticipated, Marvell said, 

"Looking ahead, while inventory digestion in some end markets is taking longer to resolve, demand from AI applications continues to strengthen, and Marvell is well-positioned to benefit from that trend," CEO Matt Murphy told investors on a conference call late Thursday. 

"Looking forward, between the ongoing strength from Electro-Optics and the expected ramp of multiple custom compute programs, we are expecting continued outsized growth from AI," he added. "Our results and outlook continue to validate our strategy to focus on developing the most advanced silicon for data infrastructure. The diversification in our end markets is serving us well with strong growth from AI and cloud, carrying us through a softening macro environment."

Marvell shares were marked 3.3% lower in pre-market trading to indicate an opening bell price of $55.41 each.

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