Nvidia CEO predicts $1 trillion capitalization for Marvell. Shares soar 25%

Shares of Marvell Technology, which makes networking chips for data centers, soared more than 25% in opening trading on June 2 after it was backed by Nvidia CEO Jensen Huang. He suggested that Marvell would be the next company with a market value of $1 trillion, CNBC reported. Its capitalization has already increased 2.5 times since the beginning of the year, and Huang's forecast means a five-fold increase from the last close.

Marvell shares rose 25.4% in trading on June 2. During a joint speech with the company's head Matthew Murphy at the Computex exhibition in Taipei, Nvidia CEO Jensen Huang praised the partner's contribution to providing infrastructure for AI development. According to him, networking solutions of this developer are crucial for fast data exchange between thousands of AI chips in huge computing clusters of data centers.

"When you take a computational task, break it down into many pieces and distribute it throughout the data center, connectivity becomes the key element. That's why things are going so well for Matt. That's why Marvell is so indispensable. That's why you're going to be the next trillion dollar company," Huang said, referring to Murphy.

Such a forecast on Marvell capitalization assumes a five-fold growth from the current level. At the end of trading on Monday, June 1, the market value of the manufacturer reached $192 billion.

Marvell specializes in designing high-performance chips used in global data infrastructure, including cloud computing, artificial intelligence, enterprise networks, 5G carrier networks and automotive systems, CNBC writes.

The company's results for the last quarter exceeded analysts' estimates. Revenue jumped 28% year-on-year to a record $2.4 billion. Marvell expects further revenue growth due to the strong performance of its data center business.

One of the drivers of this growth could be the optical networking trend. As AI data centers scale up, demand is growing for optical transceivers that allow data to be transmitted using light signals. And Marvell makes digital signal processors for such devices, Barron's notes. Barclays analyst Tom O'Malley estimates that the company's revenue from optical networking could grow 90% this year and next.

In March, Nvidia invested $2 billion in Marvell and expanded its partnership with the company. The partnership will integrate Marvell's networking solutions, custom chips and optical technologies into Nvidia's data center ecosystem. The companies also plan to jointly develop silicon photonics technologies, one of the key areas for accelerating data exchange.

Wall Street, however, is not as optimistic as Huang. Although the vast majority of analysts advise to buy the stock, the average target price is only 2.7% higher than the last close. If the June 2 rally continues, the average target will be below the real value of the stock. At the same time, even the most optimistic estimate of $300 is only about 13% higher.

This article was AI-translated and verified by a human editor