Marvell Technology (MRVL) -) shares slumped lower Friday after the chipmaker issued a muted near-term outlook that clouded solid second quarter earnings posted after the close of trading last night.
Adjusted profit for the three months ended in June fell 42% from a year earlier to 33 cents a share, a penny ahead of Wall Street forecasts. Group revenue fell 8% to $1.34 billion, narrowly topping analysts' estimates of a $1.33 billion tally.
Marvel said current-quarter revenue would likely hit $1.4 billion, a year-on-year decline of around 9%, with gross margin narrowing to around 38.9%. That said, AI demand is likely to continue to drive sequential revenue gains that are higher than 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," Chief Executive 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."
At last check Marvell shares were marked 7.7% lower in early afternoon trading to change hands at $52.86 each, a move that would still leave the stock with a 42.7% gain for the year.
"Although excess customer inventories across markets like storage and enterprise networking are taking longer than we anticipated to burn amid macro uncertainty, Marvel's revenue trajectory for AI is growing faster than we thought," said CFRA analyst Angelo Zino, who carries a 'strong buy' rating with a $70 price target on the stock.
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