Marvell (MRVL) vs. AVGO and NVDA: Can AI Interconnect Growth Deliver the Earnings Its Premium Valuation Demands?

Marvell (MRVL) vs. AVGO and NVDA: Can AI Interconnect Growth Deliver the Earnings Its Premium Valuation Demands?

Sun, August 9, 2026 at 9:19 PM GMT+3 6 min read

Is MRVL a good stock to buy? We came across a bullish thesis on Marvell Technology, Inc. on Compounding Your Wealth's Substack by Sergey. In this article, we will summarize the bulls' thesis on MRVL. Marvell Technology, Inc.'s share was trading at $211.02 as of August 6th 2026. MRVL's trailing and forward P/E were 64.45 and 46.30 respectively according to Yahoo Finance.

Marvell Technology designs chips and networking gear used to build AI infrastructure, and its most important growth engine right now is the Data Center segment. As AI companies build bigger clusters of computers, they need faster connections and more specialized chips to keep data moving efficiently, and Marvell supplies several of the pieces needed for that job. In the latest quarter, revenue grew 27.6% year over year to $2.42 billion, an acceleration from 22.1% growth in the prior quarter, while Data Center revenue rose 27.2% to $1.83 billion. These are strong numbers, but the stock is also priced for continued strong growth, trading at 20.3 times enterprise value to sales and nearly 51 times forward earnings — multiples that assume the company keeps delivering results like this for years to come.

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The bullish argument is that as AI computing clusters grow larger and more complex, they will need more custom chips, more networking capacity, and faster interconnects, and Marvell can benefit from all three at once — both as more AI infrastructure gets built and as each new system needs faster connections between processors, memory, and networking equipment. The numbers back this up so far: Data Center now makes up about 76% of Marvell's total revenue, making it the main driver of the company's improving growth rate rather than just one contributor among many.

Management also raised its long-term outlook, lifting its fiscal 2027 revenue forecast by more than $500 million and its fiscal 2028 forecast by around $1.5 billion, putting fiscal 2028 revenue at an expected $16.5 billion. The interconnect business stands out in particular, with growth for fiscal 2027 now expected to top 70% year over year — a sign that management expects this demand to continue well beyond one strong quarter. If AI customers keep building bigger systems, Marvell should have several more years of growth ahead across custom chips, networking, and interconnects. An expanded partnership with NVIDIA, covering silicon photonics, NVLink Fusion integration, and AI radio networking, gives Marvell even more ways to participate as this AI buildout continues.

Profitability is also moving in the right direction. Gross margin expanded to 52%, up 190 basis points from a year earlier, and free cash flow margin — a measure of how much cash the business generates relative to revenue — rose to 20%, up 870 basis points. Operating income grew 25.4% year over year, showing the company is growing profitably even while investing heavily in AI infrastructure. That said, operating margin slipped slightly to 14%, so the improvement hasn't shown up evenly across every profitability measure yet. Investors will want to see whether continued Data Center and interconnect growth can keep lifting gross margin and cash generation while also improving cost control.

The bigger concern is that these improvements haven't yet reached the bottom line. If Marvell's AI opportunity is really as large as management believes, investors would eventually expect stronger net income and earnings per share — and that hasn't happened yet. Net margin was just 1%, down 800 basis points from a year earlier, and earnings per share fell 80% to $0.04. In other words, revenue is growing quickly, but that growth hasn't translated into stronger profits for shareholders. Shares outstanding also rose 2% over the past year, adding mild dilution on top of already weak per-share profitability. Given the stock's premium valuation, stronger earnings growth will eventually be needed to justify the price investors are paying.

Hedge fund positioning provides a cautious signal. As per our database, 79 hedge fund portfolios held Marvell Technology Inc. (NASDAQ:MRVL) at the end of the first quarter, down from 85 in the previous quarter. That decline suggests some institutional investors trimmed their positions even as revenue growth accelerated, data Center demand stayed strong, and management raised its long-term outlook. This is a sign of cautious sentiment despite improving fundamentals. By comparison, Broadcom Inc. (NASDAQ:AVGO) was held by 173 hedge funds, down from 202, NVIDIA Corporation (NASDAQ:NVDA) was held by 275 hedge funds, up from 264, and QUALCOMM Incorporated (NASDAQ:QCOM) was held by 71 hedge funds, down from 78. NVIDIA Corporation (NASDAQ:NVDA) was the only company in the group where hedge fund ownership increased, while Marvell Technology Inc. (NASDAQ:MRVL), Broadcom Inc. (NASDAQ:AVGO), and QUALCOMM Incorporated (NASDAQ:QCOM) all saw ownership decline despite continued enthusiasm for AI-related stocks.

Short interest data also paints a fairly mixed picture for the group. 4.34% of Marvell Technology Inc. (NASDAQ:MRVL)'s float was sold short, the highest among these four stocks, compared with 3.83% for QUALCOMM Incorporated (NASDAQ:QCOM), 1.47% for Broadcom Inc. (NASDAQ:AVGO), and 1.39% for NVIDIA Corporation (NASDAQ:NVDA). That makes Marvell the most heavily shorted stock in the group, reflecting greater investor scrutiny of its premium valuation, thin net margin, and declining earnings per share. The level of short interest isn't extreme on its own, but it is clearly higher than for its three larger semiconductor peers, even though Marvell's growth outlook is arguably stronger.

Put simply, the bullish case for Marvell holds up as long as data center revenue stays strong, interconnect growth stays above 70%, the company moves toward its already-raised fiscal 2028 revenue target, and gross margin, free cash flow, net margin, and earnings per share all keep improving. The central question for investors is whether Marvell can convert its custom silicon, networking, interconnect, and NVIDIA partnership opportunities into real earnings growth quickly enough to justify its premium valuation. Hedge funds are a bit skeptical.

Previously, we covered a bullish thesis on Marvell Technology, Inc. (MRVL) by Simple Investing in January 2025, which highlighted the company's custom silicon expansion and Data Center growth. MRVL's stock price has appreciated by approximately 83.17% since our coverage. Sergey shares a similar view but emphasizes on Marvell's accelerating AI infrastructure momentum, expanding NVIDIA partnership, and stronger long-term revenue outlook.

Marvell Technology, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 79 hedge fund portfolios held MRVL at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the potential of MRVL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

Disclosure: None.