Investment Advice: Optimal Growth Stock Purchase with a $80 budget
Marvell Technology, a leading semiconductor company, is poised for robust growth in the custom artificial intelligence (AI) processor market, as it aims to capture a substantial market share by 2028.
Currently trading at just under $80 per share, Marvell's stock presents an attractive investment opportunity, with its multiple of 22 times earnings significantly lower than the tech-centric Nasdaq-100 index's average earnings multiple of 32.
Marvell has set ambitious targets for its market share, aiming to increase its presence in the custom AI processor market from the current 5% to a staggering 20% by 2028. This ambition is driven by the company's belief in the immense potential of the market, which it estimates will grow to nearly $100 billion by 2028.
The custom XPU (custom AI processor) market segment relevant to Marvell is projected to grow at a rapid 47% compound annual growth rate (CAGR) through 2028. The "custom XPU attach" segment, involving accelerators or complementary AI processing chips, is forecasted to grow even faster at a staggering 90% CAGR through 2028.
Marvell's custom AI-related segments are expected to significantly expand, with the custom XPU market growing from $0.6 billion in 2023 to about $14.6 billion in 2028, reflecting the rapid adoption of its AI accelerator chips.
Analysts from Bank of America and Deutsche Bank recognise Marvell as one of the few companies well positioned to capitalise on the rapidly expanding custom data center silicon market driven by AI infrastructure investments from Big Tech.
To achieve its market share goals, Marvell is making significant strides in technology development. The company is working on a 2-nanometer (nm) chip platform that could reduce electricity consumption by 20-35% and increase computing performance by 15%. Additionally, Marvell is improving its packaging technology to equip custom AI processors with more high-bandwidth memory (HBM), and designing smaller chips that offer increased computing power and energy efficiency.
Marvell also plans to increase the number of customers using its custom AI chips from the current 4 to 10 over the next three years. This expansion is expected to contribute significantly to the growth of Marvell's data center business, which, if it reaches five times its fiscal 2025 revenue, could help the company significantly exceed analysts' expectations.
Despite a challenging 2025, with Marvell's stock dropping 31% and nearly 20% in a single day following its quarterly report, the growth potential of the company's data center business remains undiminished. Marvell expects the size of the custom AI processor market to top $55 billion by 2028, offering a promising outlook for the company's future.
In conclusion, Marvell Technology's strategic focus on the custom AI processor market, coupled with its technological advancements and ambitious growth targets, position it as a strong contender in the custom AI silicon space over the next few years. With its attractive valuation and promising growth prospects, Marvell Technology could be one of the smartest growth stocks to buy with just $80.
- Marvell Technology's strategic focus on the custom AI processor market, with its aim to capture a substantial market share by 2028, presents an attractive investing opportunity in the finance realm, especially considering its lower multiple of earnings compared to the tech-centric Nasdaq-100 index.
- The rapid growth of Marvell's custom XPU market segment, projected to grow at a CAGR of 47% through 2028, and the "custom XPU attach" segment, forecasted to grow at a staggering 90% CAGR during the same period, suggest robust potential for investing in this semiconductor company's stock-market presence.
- As technology development is a key aspect of Marvell's growth strategy, its efforts in creating a 2-nanometer chip platform, improving packaging technology, and designing smaller chips with increased computing power and energy efficiency are likely to be significant factors impacting the investing landscape for this company.
- With ambitious plans to increase the number of customers using its custom AI chips from 4 to 10 over the next three years, Marvell Technology could significantly grow its data center business, potentially exceeding analysts' expectations and making it a smart growth stock to consider, especially priced just under $80 per share in the stock-market.
