Dj Marvell Technology Price Target Announced At $114.00/Share By Citigroup

As one of the promising players in the AI landscape, Marvell Technology MRVL is making headlines after exceeding its Q3 expectations on Tuesday evening and announcing the acquisition of private semiconductor startup Celestial AI.

Marvell also provided upbeat guidance, with MRVL spiking as much as +9% in Wednesday’s trading session and trading over $100 a share for the first time in nine months.

That said, let’s see if it's time to buy stock in the innovative chipmaker, with MRVL having a 52-week high of $127.

Celestial AI Acquisition 

Subject to regulatory approvals and customary closing conditions, the acquisition of Celestial AI is expected to be completed in the first half of 2026. The acquisition is valued at $3.25 billion in cash and stock, with the potential to rise to $5.5 billion if revenue milestones are met. 

Celestial AI is focused on advanced photonic interconnect technology, using light to connect chips and memory in data centers, which would help Marvell to compete more directly with Broadcom AVGO and Nvidia NVDA in regard to next-gen AI infrastructure.

Acquiring Celestial AI would also strengthen Marvell’s role in the generative AI race, where hyperscalers are demanding faster, energy-efficient systems.

Marvell’s Strong Q3 Results

Posting record Q3 sales of $2.07 billion, Marvell exceeded estimates of $2.06 billion with its top line stretching 37% from $1.51 billion in the comparative quarter. More impressive, Q3 EPS of $0.76 topped expectations of $0.75 and soared 77% from $0.43 per share a year ago.

Marvell’s Upbeat Guidance

Further fueling investor sentiment is that Marvell projects stronger revenue and earnings for the next quarter and fiscal year, providing a guidance range that met and will potentially exceed Wall Street's forecast.

Fourth quarter sales were guided at around $2.2 billion ±5%, with Zacks estimates currently at $2.15 billion or 18% growth. Marvell expects Q3 EPS at $0.79 ± $0.05, with the current Zacks Consensus of $0.78 equating to 30% growth. 

Driven by strong demand in data center products, Marvell sees full-year revenue growth exceeding 40%, which aligns with consensus estimates of $8.12 billion or 41% growth. Even better is that Marvell expects data center revenue growth to be higher next year, reflecting accelerating AI demand.

Marvell’s Reasonable P/E Valuation

Considering its intriguing AI prospects, Marvell’s stock is trading at a reasonable 32X forward earnings multiple.

Trading roughly on par with its Zacks Electronics-Semiconductors industry average, MRVL has moved closer to the broader market’s forward P/E multiple of 26X and is offering a distinct discount to its 5-year median of 53X with a high of 151X during this period.

Bottom Line

Following a favorable Q3 report, Marvell Technology's stock sports a Zacks Rank #2 (Buy). Correlating with such, earnings estimate revisions had already moved slightly higher in the last 30 days for Marvell’s current fiscal 2026 and FY27. This trend is likely to continue in the coming weeks, with Marvell’s appealing EPS growth starting to level what is now a far more reasonable P/E valuation than in the past.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

By Andrew Bary

Snowflake is the largest company ranked by market value that isn't in the S&P 500, but the software provider likely isn't a candidate for admission to the index because it isn't profitable based on traditional accounting rules.

Snowflake, which has a market cap of $87 billion, isn't alone. There are about a dozen large companies, nearly all from the tech sector, that probably don't make the cut for the same reason, according to a report Wednesday from Stephens analyst Melissa Roberts.

They include Marvell Technology, Cloudfare, Roblox, Rocket Cos. Atlassian, Zscaler, DraftKings and MongoDB.

There has been plenty of speculation recently about candidates to join S&P 500 with the index's quarterly rebalancing occurring later in December. An announcement of any new additions to the benchmark index likely will come late Friday afternoon.

S&P Dow Jones Indices, which oversees the S&P 500, has made additions to the index at every quarterly rebalance except one over the past three years.

Barron's wrote earlier this week that Vertiv Holdings, Ares Management, Alnylam Pharmaceuticals and CRH are among the leading candidates to enter the S&P 500 based on their size and profitability.

Snowflake is notable because it has been public for five years and has a high market value, but still isn't profitable based on generally accepted accounting principles. The company, whose stock trades around $267, lost 89 cents a share in its July quarter and about $2 a share in the first half of its current fiscal year. Snowflake is due to report results for its third fiscal quarter later Wednesday.

S&P Dow Jones Indices requires that companies that enter the S&P 1500, which encompasses the S&P 500, S&P Midcap 400 and S&P SmallCap 600, be profitable in the most recent quarter based on generally accepted accounting principles and also be profitable on a GAAP basis based on the sum of their profits over the most recent four quarters. Companies also need to have a market value of at least $22.7 billion to enter the S&P 500.

Snowflake and most of the other software companies that likely don't make the cut for the S&P 500 emphasize a non-GAAP profit measure that excludes sizable stock-based compensation, which is often paid in restricted shares.

Analysts and investors are willing to value Snowflake and other tech companies based on what Barron's and many observers view as a dubious measure since stock-compensation is a real expense. The argument in favor of using the non-GAAP profits is that stock comp is noncash expense. For companies like Snowflake, stock comp is a significant chunk of its revenues — about 35% of sales at Snowflake in the July quarter.

The vast majority of public companies only emphasize GAAP accounting and treat stock comp as the expense that it is. Berkshire Hathaway CEO Warren Buffett is a leading critic of non-GAAP earnings that exclude stock comp.

Buffett wrote in his 2016 shareholder letter: "To say "stock-based compensation" isn't an expense is even more cavalier. CEOs who go down that road are, in effect, saying to shareholders, "If you pay me a bundle in options or restricted stock, don't worry about its effect on earnings. I'll 'adjust' it away."

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.