Marvell Analyst Tags Stock as Top Pick for AI Boom, Predicts Significant Industry Upswing

Zinger Key Points
  • Evercore ISI sees Marvell Tech leading in AI era with a $88 target, spotlighting the start of a decade-long growth phase.
  • Analyst marks Marvell and peers as top picks in semiconductors, with a strategic eye on a mid-cycle buying opportunity in 2024.

Evercore ISI Group analyst Mark Lipacis initiated coverage on Marvell Technology Inc MRVL with an Outperform rating and a price target of $88.

The analyst initiated coverage of the semiconductor sector with an optimistic outlook, both from secular and cyclical perspectives. 

He highlighted a positive long-term view, particularly favoring companies engaged in Parallel Processing, such as Nvidia Corp NVDAAdvanced Micro Devices, Inc AMDBroadcom Inc AVGO, and Marvell, as well as those in the Internet of Things (IoT) sector like Texas Instruments Inc TXNAnalog Devices Inc ADIMicrochip Technology Inc MCHP, and NXP Semiconductors NV NXPI

According to the analyst, these companies will likely lead in segments predicted to experience the highest growth. 

Also Read: Marvell Tech Set for Major Growth with AI Accelerators for Amazon, Google, and Potential Microsoft Deal: Analysts

The analysis underscores the belief that they are at the beginning of a decade-long era of AI and parallel processing, where even competitors holding a 20-30% market share can achieve significant returns. Specifically for Marvell Technology, the analyst pointed out its promising prospects in networking, which are attributed to technologies acquired from Cavium, Innovium, and Aquantia.

From a cyclical standpoint, the current upcycle in the semiconductor industry will likely continue into the first and second quarters of 2025, as per Lipacis. 

This duration could extend to the end of 2025 for analog and microcontroller units (MCUs), which have been slower in adjusting their inventory levels. 

However, he said a mid-cycle correction is predicted for the third and fourth quarters of 2024, presenting a strategic purchasing opportunity ahead of the cycle’s climax. 

Marvell Technology stock gained over 68% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Digital Infrastructure And Real Estate ETF IDGT and Spear Alpha ETF SPRX.

Price Action: MRVL shares are trading higher by 0.70% to $68.36 on the last check Tuesday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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