Marvell Technology’s stock tumbled 18% on Thursday morning, reaching $73.94 per share. This sharp decline adds to a year-to-date loss of approximately 34.5%, signaling mounting investor concern.
Disappointing Earnings Guidance
Despite Marvell’s fiscal first-quarter outlook exceeding some expectations, it fell short of the highest forecasts. The company projected $1.875 billion in revenue for the quarter, slightly above the $1.865 billion anticipated by Wall Street analysts. However, its projected adjusted earnings per share (EPS) of $0.61, compared to the consensus estimate of $0.60, failed to impress investors. Marvell also reported a modest beat on its fourth-quarter revenue.
Impact on AI Trade Sentiment
Ahead of its earnings report, Marvell was seen as a potential driver to reignite enthusiasm for the AI sector. Wall Street had high hopes that Marvell, a key semiconductor maker, could revive investor interest in AI stocks, particularly after Nvidia’s results failed to energize the market last week.
In a note earlier this week, Bank of America expressed hopes that Marvell’s performance would spark renewed excitement for AI, a sector that has faced increasing doubts about its growth prospects.
Weak AI Sector Sentiment Continues
Marvell’s underwhelming results have further fueled concerns that the AI trade is losing momentum. Investor sentiment around AI stocks has cooled recently, driven by uncertainties about massive AI investments from Big Tech companies and whether the demand for AI technology can continue at the same pace.
Marvell’s disappointing report not only failed to reignite investor interest in AI but also contributed to a broader market decline. The stock drop dragged down other prominent AI-related companies, including Nvidia and Broadcom, which lost around 3% and 5%, respectively, in pre-market trading.
What’s Next for AI Stocks?
With Marvell’s poor results adding to the worries, all eyes are now on Broadcom’s earnings report, scheduled for after the market closes on Thursday. Broadcom’s performance could be the next key factor to influence investor sentiment and provide a potential catalyst for the struggling AI sector.
Meanwhile, major companies involved in AI, including Microsoft, Meta, and Alphabet, all saw their shares fall by more than 1% on Thursday morning, reflecting the widespread unease in the sector.
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