Chip maker Marvell technology (MRVL) exceeded Wall Street’s targets for the fiscal second quarter and provided a consistent forecast for the current period. MRVL stock fell on Friday on the news.
The Santa Clara, California-based company said late Thursday that it earned an adjusted profit of 33 cents per share on sales of $1.34 billion for the quarter ended July 29. Analysts polled by FactSet had forecast Marvell earnings of 32 cents a share on sales of $1.33 billion. . However, year over year, Marvel’s profits fell 42% while sales shrank 12%.
Marvell’s profits have now fallen for three straight quarters while sales have fallen for the last two quarters.
For the current quarter, Marvell expected adjusted earnings of 40 cents per share on sales of $1.4 billion. Analysts called earnings of 40 cents per share on sales of $1.39 billion in the fiscal third quarter. In the same period last year, Marvell earned 57 cents a share on sales of $1.54 billion.
MRVL shares drop after the report
In today’s stock market morning trading, MRVL stock fell by 8.1% to reach 52.63. During the regular session on Thursday, MRVL dropped 6.9% to close at 57.29 amid a bad day for semiconductor stocks.
Prior to the earnings report, MRVL stock had been consolidating for the past 13 weeks at a buy point of 67.99, according to IBD MarketSmith Charts.
Marvell manufactures networking and data storage chips used in cloud computing, automotive, telecom, and other applications.
in New releaseCEO Matt Murphy said the company’s revenue picture is improving thanks to demand for artificial intelligence and cloud infrastructure.
“Demand from AI applications continues to strengthen, pushing our overall AI revenue forecast for this fiscal year higher than previously identified,” Murphy said. “Our strategy to focus on data infrastructure across a variety of end markets serves us well despite the deteriorating macro environment.”
The demand for AI chips is a bright spot
Continuing weakness in Marvell’s legacy business segments, such as networking and data warehousing, has overshadowed growth in the company’s artificial intelligence business.
“Accelerating demand for AI, particularly for photovoltaic components, is driving growth and offsetting inventory digests across multiple segments that will not end by the end of calendar year 2023,” Quinn Bolton, a Needham analyst, said in a note to clients.
He added, “Weak demand and high inventory levels are driving the recovery of the warehousing and enterprise network markets until the first half of 2024.”
Bolton reiterated his rating to Buy on MRVL shares with a $65 price target.
Follow Patrick Seitz on Twitter at @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.
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