Marvell slides nearly 8% after earnings despite guidance raise

Marvell Technology, Inc (NASDAQ: MRVL ) shares fell nearly 8% in Friday premarket trading as investors reset expectations after the company's earnings report, despite continued data center strength and a stronger growth outlook.

Marvell Beats Q2 Estimates, Raises Growth Expectations Marvell reported second-quarter revenue of $2.74 billion and adjusted EPS of 94 cents, both beating the consensus estimates.

Management pointed to continued strength across its Data Center portfolio.

For the third quarter, Marvell guided revenue to $3.15 billion, plus or minus 5%, and adjusted EPS to $1.10, plus or minus 5 cents.

The company also expects an adjusted gross margin of 57.5% to 58.5%.

CEO Matt Murphy raised Marvell's revenue target for next year to roughly $18 billion, implying about 50% growth.

Google Deal Clarification Cools Investor Enthusiasm CNBC noted that Marvell's data center business is growing more than 60%, supported by optical components that connect AI servers and custom chips, which Murphy expects to more than double.

However, Murphy said revenue from Marvell's recently announced Alphabet Inc (NASDAQ: GOOGL ) (NASDAQ: GOOG ) Google warrant agreement is already included in next year's projections.

That clarification reduced some investor enthusiasm because Wall Street had viewed the Google agreement as additional upside beyond existing expectations.

Murphy said the larger contribution from the deal should come the following year.

CNBC also pointed to elevated expectations after Marvell shares had climbed about 184% year to date and nearly 30% over the previous month.

Seymour Prefers NVIDIA At Current Valuations Seymour Asset Management founder and CIO Tim Seymour said Marvell sits in attractive areas of the AI infrastructure market, particularly networking and data centers.

He called Marvell's forward guidance strong but said investors still face uncertainty over the appropriate valuation multiple for the stock.

Seymour does not own Marvell and said he would rather own NVIDIA Corp (NASDAQ: NVDA ) at what he considers a more attractive valuation.

Marvell Top ETF Exposure Invesco PHLX Semiconductor ETF (NASDAQ: SOXQ ): 4.53% Weight State Street SPDR NYSE Technology ETF (NYSE: XNTK ): 5.69% Weight First Trust Nasdaq Semiconductor ETF (NASDAQ: FTXL ): 6.92% Weight Significance: Because MRVL carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

MRVL Price Action: Marvell Technology shares were down 7.58% at $223.14 during premarket trading on Friday, according to Pro data.

Read Also: Inside Supermicro's Stock Gain: How NVIDIA's Record Q2 Drives Data Center Demand Photo via Shutterstock