Marvell (NASDAQ:MRVL) stock is still cheap under $70 as AI demand explodes

Marvell (NASDAQ:MRVL) trades near $70 despite 38% drop from peak

Marvell Technology (NASDAQ:MRVL) has dropped more than 38% from its all-time high, trading around $70 per share, but that pullback has created one of the most compelling valuation gaps in the AI infrastructure space. The company just reported $1.9 billion in Q1 FY2026 revenue, up 63% year-over-year, and guided for $2 billion in the current quarter. Data center revenues — which make up 76% of total sales — surged 76% YoY to $1.44 billion, showing that Marvell’s growth story is accelerating despite macro pressures. Its EPS for the quarter landed at $0.62, and the current valuation doesn’t reflect any of this forward momentum.

Hyperscaler demand drives next-gen silicon deployment

Marvell’s deep strategic alignment with hyperscalers like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) is translating directly into design wins. The company has already secured 3nm wafer capacity and is moving into production of next-gen custom AI silicon (XPU) with AWS for delivery beginning in calendar 2026. This partnership includes PCIe retimers, optical DSPs, Ethernet switching silicon, and other foundational elements of AI data center architecture. Amazon’s recent $10 billion North Carolina data center buildout, part of its $100 billion CapEx plan, places MRVL’s chips at the heart of AI expansion. Marvell has also confirmed active architecture work on the follow-on generation with another major U.S. hyperscaler.

Socket expansion signals multibillion-dollar potential

Marvell now has 18 active sockets across top and emerging hyperscalers — including 3 custom XPU sockets and 9 XPU attach sockets with the top four, and another 6 sockets with newer cloud providers. These sockets represent massive lifetime revenue: each XPU socket could bring in billions, while XPU attach designs are expected to deliver hundreds of millions over 2–4 years. With more than 50 total AI programs in development, Marvell has secured an early leadership position in the custom silicon race. At a time when the custom XPU market is projected to grow from $6.6 billion in 2023 to $55.4 billion by 2028, MRVL aims to control ~20% of that market, or around $11 billion annually.

Optical and interconnect strength enhances scale advantage

One of MRVL’s most underappreciated edges is its pioneering work in 800G and 1.6T DSP chips, which are enabling the transition from copper to optical infrastructure inside AI clusters. Marvell was the first to showcase 400-gig SerDes per lane, and its chips are being adopted across top data center operators. These technologies can reduce power usage by 20% or more versus older copper-based systems. The company is also working closely with NVIDIA (NASDAQ:NVDA) on NVLink Fusion for its XPU attach silicon, ensuring that MRVL products play a key role in scale-up AI training environments. Advanced packaging and PIVR innovations further reduce power draw by up to 15%.

Valuation gap vs peers creates a major rerating opportunity

Marvell’s current forward PEG ratio of 0.58x is shockingly low compared to Broadcom (NASDAQ:AVGO) at 1.76x, despite MRVL showing 3x faster revenue growth. MRVL’s price-to-sales ratio stands at 10.27x, compared to 20.19x for AVGO, yet Marvell posted 63% YoY revenue growth while AVGO reported just 20.16%. Even AMD (NASDAQ:AMD) and NVIDIA (NASDAQ:NVDA) — with similar custom chip ambitions — trade at much richer valuations. If MRVL simply re-rated to AVGO’s multiple, the stock would be valued closer to $140–$150, more than double its current price.

Insider buybacks and cash flow signal confidence

Marvell’s balance sheet reflects discipline and internal conviction. The company repurchased $340 million in shares last quarter while generating $333 million in operating cash flow. It still carries $4.2 billion in debt, but that’s manageable relative to its scale and growth trajectory. These repurchases signal high management confidence. For a detailed view of insider activity, see the latest filings here: Insider transactions.

Massive TAM expansion unlocks long-term upside

The total addressable market (TAM) for Marvell’s product suite is set to hit $90 billion by 2028. The TAM breakdown includes $20 billion for custom silicon, $40 billion for AI interconnect and connectivity, $6 billion for automotive/carrier, and $3 billion for enterprise and storage. Based on management’s revenue projections and current momentum, MRVL is on track to generate $4–5 billion in custom silicon, $1.5–2 billion in AI connectivity, and $2–3 billion in compute infrastructure revenues by 2028. That’s a double-digit share in each segment.

Risk factors centered on hyperscaler concentration and macro headwinds

The biggest near-term risk is hyperscaler CapEx timing, especially from AWS and Microsoft. Microsoft recently said its CapEx will grow slower in FY2026, with more investment in short-lived assets tied to revenue. That might slow near-term demand for some Marvell components. Trade tensions with China and competitive pressure from Broadcom and internal chip development at cloud providers also remain overhangs. But MRVL’s design wins and socket expansion provide strong hedging. Its customer mix is less concentrated than peers like Credo (NASDAQ:CRDO) or Astera Labs (NASDAQ:ALAB).

MRVL is mispriced in a premium market cycle

With AI valuations hitting all-time highs, there is no reason why a company like Marvell, which shows real product wins, explosive revenue growth, and hyperscaler alignment, should still be trading at a forward PEG below 0.6x. Even if margins are thinner on custom silicon, the long-term volume leverage and socket retention create durable earnings power. MRVL already has 3nm wafer deals secured, architecture plans for next-gen custom XPUs underway, and a product portfolio that stretches across compute, interconnect, optics, and memory attach. Add to that macro tailwinds like potential Fed rate cuts and sustained AI infrastructure CapEx, and this is a setup for rerating.

Verdict: NASDAQ:MRVL is a strong buy with 2x–3x upside

The valuation discount is too wide to ignore. Marvell is growing faster than peers, trading cheaper than everyone, and securing deep engagements with multiple hyperscalers. With over $2 billion in projected revenue next quarter, 18 AI sockets already deployed, and a clear roadmap into 2026 and beyond, this stock is not priced for the opportunity ahead. NASDAQ:MRVL is a strong buy, with a multi-quarter price target of $140+ as multiples normalize and hyperscaler AI investments scale into full production.

Link to real-time chart: MRVL Chart
Insider activity: MRVL insiders

That's TradingNEWS