Summary of Key Points
On June 2, the pre-market stock price of Marvell (MRVL.O), a manufacturer of data infrastructure for the U.S. stock market, soared by more than 27%, with a market value of $192 billion the previous day. This sharp increase was mainly driven by NVIDIA's (CEO Jensen Huang) prediction at the COMPUTEX conference in Taipei that Marvell could become the next company to reach a trillion-dollar market value. The rationale behind this is that the third bottleneck in AI infrastructure—connection—is becoming a critical factor in the industry, and Marvell specializes in AI connectivity and custom chip solutions. Additionally, NVIDIA's investment of $2 billion, deep technical collaboration, and Marvell's own record-breaking performance growth have collectively fueled high expectations for its future prospects. Meanwhile, Broadcom (AVGO.O), which has a similar business focus, also saw a significant increase in its stock price, reflecting the overall enthusiasm for the AI connectivity segment.
Detailed Analysis
Why Did Jensen Huang's "Trillion-Dollar Prediction" Spark Stock Price Growth?
Jensen Huang's statement carries weight because NVIDIA holds significant influence in the AI field as the leading company in AI computing power (the first to reach a $5 trillion market value), and its industry trends are almost considered a benchmark. His prediction that Marvell could become a trillion-dollar company is not baseless:
- Identifying the New Bottleneck in AI Infrastructure: AI infrastructure development involves three steps: computing power (led by NVIDIA), memory (with several companies already reaching trillion-dollar market values), and connection (which is now the focus). The efficiency of data communication between numerous computing devices in data centers is a critical bottleneck for scaling up AI.
- Marvell's Precise Positioning: Huang emphasized that "intelligent agent computing is decentralized, and connectivity is crucial," and Marvell is a key player in providing AI connectivity solutions, such as optical components, switches, and cross-datacenter modules.
Upon hearing that NVIDIA is optimistic about the future of AI and that this segment is just beginning to flourish, investors naturally flocked to buy Marvell's stocks.
Is Marvell the Solution to the "Third Bottleneck" in AI Infrastructure—Connection?
You can think of an AI data center as a series of factories: computing power represents the machines, memory represents the warehouses, and connection is the conveyor belt that links them. While there has been focus on increasing the number of machines (computing power) and warehouses (memory), if the conveyor belt (connection) is not fast enough or long enough, it will limit the efficiency of the entire system.
- Marvell's Solutions: Marvell offers high-speed connectivity solutions, such as 800G/1.6T optical components, CPO (Co-Packaged Optics) technologies that reduce data transmission losses, and Ethernet switches that act as the control centers for data transfer. These products enable faster and more extensive data transfer between computing devices, overcoming the limitations of scaling up AI.
- Industry Consensus: Marvell CEO Matt stated that "connection determines the limits of infrastructure," a view echoed by Huang, who noted that as AI models grow larger, more devices will need to work together, making connectivity even more important.
Why Is NVIDIA Investing $2 Billion and Collaborating Deeply with Marvell?
NVIDIA's investment is not just symbolic; it represents a strategic partnership:
- Collaboration Scope: Based on the NVLink Fusion rack-level platform, Marvell provides customized XPU chips and network solutions compatible with NVLink, while NVIDIA provides supporting technologies (such as the Vera CPU and NVLink interconnect). Together, they create a complete set of AI data center connectivity solutions, with NVIDIA focusing on computing power and Marvell on connecting devices.
- Shared Customers: Both companies have common customers, such as large cloud providers, allowing them to compete for orders together. Marvell can leverage NVIDIA's customer base for rapid expansion.
- Technological Integration: NVLink is NVIDIA's high-speed interconnect technology, and Marvell's products are compatible with it, integrating Marvell's connectivity solutions into NVIDIA's AI ecosystem, providing significant credibility for Marvell.
Are Marvell's Outstanding Results and Doubling Stock Price Justified?
The market's optimism is not unfounded; Marvell's performance has already begun to materialize:
- Latest Financials: Revenue in Q1 of fiscal year 2027 was $2.418 billion, a 28% increase from the previous year, exceeding expectations, with a net profit of $34.5 million. The CEO noted strong demand for AI-related products and robust growth in the data center business.
- Growth Expectations: Revenue is expected to grow by 35% in Q2, with annual growth accelerating, indicating that the AI business is contributing significantly to Marvell's success.
- Stock Performance: From April 1 to June 1, the stock price increased by 121.65%, more than doubling, especially after NVIDIA's investment, reflecting market confidence in Marvell's growth potential in AI connectivity.
Why Has Broadcom Also Seen a Rise in Stock Price?
Broadcom (AVGO.O), which has a similar business focus to Marvell, also saw its stock price rise by 48.61%, reaching a market value of $2.2 trillion. This indicates that the success is not limited to Marvell but reflects the overall popularity of the AI connectivity segment:
- Broadcom's Business: Broadcom also specializes in custom XPU and connectivity products, competing with Marvell but benefiting from the same industry trends.
- Industry Logic: With the first two bottlenecks (computing power and memory) already addressed by trillion-dollar companies, a new giant in the AI infrastructure sector is likely to emerge. Broadcom, with a market value of $2 trillion, and Marvell at $19 billion, suggests that Marvell still has significant growth potential.
Conclusion
Marvell's stock price surge is the result of a combination of favorable circumstances: the explosive growth of the AI connectivity segment, its precise business focus, and strong partnerships with NVIDIA. Jensen Huang's prediction served as a catalyst, but the real driving force behind the increase is the growing demand for AI connectivity solutions and Marvell's technical expertise and performance. As AI models continue to expand, companies in the connectivity sector are likely to benefit. However, given the significant short-term stock price gains, there is a risk of a correction, depending on whether future performance can meet market expectations.