In a notable shift, Marvell Technology has emerged as Citigroup’s preferred specialty semiconductor pick, surpassing Nvidia, according to Citi analyst Atif Malik. Despite Marvell’s fiscal third-quarter earnings and revenue decline from the previous year, Malik expressed optimism about the company’s prospects.
Key Points:
Marvell’s Rise: Marvell Technology’s stock gained 1.8% to $69 after Citi analyst Atif Malik designated it as the new No. 1 specialty chip stock. Malik cited Marvell’s favorable setup in 2024, fueled by continued growth in AI optics, custom ASIC AI project sales, and stabilization in non-cloud markets like enterprise networking and carrier.
Nvidia Drops to No. 2: In the reshuffling, Nvidia now occupies the second position in Citigroup’s specialty chip stock rankings. Despite this, Malik maintained Buy ratings for both Marvell and Nvidia, with stock price targets of $75 and $575, respectively.
Optimism for Marvell: Malik’s positive outlook on Marvell stems from its exposure to artificial intelligence (AI) and the diversification of its portfolio. Despite a softer demand environment in certain markets, Marvell’s strength in AI and cloud-related segments is seen as a key factor contributing to its resilience.
Nvidia’s Strength: While Nvidia is now ranked second, it has already gained over 15% in 2024. Analyst Srini Pajjuri from Raymond James reiterated a Strong Buy rating for Nvidia, raising the price target to $700 from $600. Pajjuri highlighted Nvidia’s dominant position in Gen AI infrastructure and anticipated robust growth driven by upcoming products, including the H200 and B100.
Analyst Insights: Oppenheimer analyst Rick Schafer expressed optimism about Marvell’s unique position in data-center AI, predicting sales acceleration in 2024 due to new product cycles and share/content gains. Schafer rated Marvell at Outperform with a $70 price target.
Marvell’s Fiscal Outlook: Despite posting lower fiscal third-quarter earnings and revenue, Marvell CEO Matt Murphy emphasized the company’s portfolio diversification, with strong growth in AI and cloud offsetting challenges in other end markets.
Continued Industry Trends: The shift in rankings comes amid ongoing changes in the semiconductor industry. Analysts recognize the significance of AI-related growth and product cycles in influencing the success of chipmakers like Marvell and Nvidia.
As Marvell takes the lead in Citigroup’s specialty chip stock rankings, the market continues to closely monitor developments in the semiconductor sector, with a focus on emerging technologies and competitive positioning.