Bank of America Maintains Marvell Buy Rating Amid AI Chip Expansion

Marvell Technology (MRVL) shares have climbed over 160% in the past six months, driven by strong demand for data center components. The stock outperformed peers like Nvidia, rising nearly 12% through September 11 while Nvidia fell more than 5%. This momentum reflects growing confidence in Marvell's role in building the underlying machinery for artificial intelligence systems, specifically custom processors and data-movement chips.

Following a meeting with CEO Matt Murphy and CFO Dan Durn, Bank of America analysts maintain a Buy rating and a $365 price target. This valuation implies nearly 55% upside from the September 11 closing price of $236.10. The firm’s conviction rests on Marvell’s ability to sell more technology per AI system, focusing on chips that connect processors and manage memory rather than just the processors themselves.

Supporting Chips Drive Revenue Potential

Bank of America estimates the market for supporting chips, which manage data flow and memory, could exceed $60 billion to $65 billion by 2030. Marvell is positioned to capture a 40% to 50% share of this segment. This would translate to an annual sales opportunity of approximately $30 billion, a substantial increase from management’s current $3 billion to $4 billion outlook for 2028. These components are harder for customers to replicate than main processors, strengthening Marvell’s competitive moat.

The company is already shipping these products to the four major U.S. hyperscalers. Each custom processor Marvell designs requires one or two supporting chips, priced between $500 and $1,500. As customers expand compute capacity, this creates recurring revenue opportunities. An expanded partnership with Google, which includes rights for Google to purchase Marvell shares, further anchors this demand. The firm expects custom processor sales to add another $15 billion in potential revenue by 2030, bringing the combined opportunity to $40 billion to $45 billion.

Earnings Models and Valuation Metrics

Analysts project calendar-2028 earnings power near $14 per share, compared to a baseline of $11. Each additional $1 billion in sales is expected to add 30 to 35 cents to earnings. The $365 price target applies a 33x multiple to baseline earnings, excluding stock compensation. This is slightly lower than Marvell’s five-year non-GAAP price-to-earnings ratio of 42x, suggesting the valuation depends on sustained high growth and premium positioning within the AI sector.

Execution Risks Remain Significant

The primary risk lies in the gap between projected market opportunity and actual delivered earnings. The $40 billion to $45 billion sales scenario relies heavily on market expansion and customer spending commitments that are not yet booked orders. Bank of America flags uncertainty around next-generation chip projects for Amazon and Microsoft. A delayed launch could push revenue outward while development costs continue, potentially weakening near-term earnings and challenging the high valuation multiple.