Marvell AI Chip Opportunity Seen as Vastly Underestimated

Marvell Technology Inc.'s (NASDAQ:MRVL) stock has surged by nearly 180% this year, prompting Bank of America analyst Vivek Arya to reiterate his Buy rating. He predicts that the market for custom AI chips and components will reach $300 billion by 2030, five to six times Marvell's own estimate of $55 billion in 2028.

Arya estimates that Marvell could capture around 30% to 40% of this market, translating to $60 billion to $65 billion in attach sales. He also forecasts a custom processor market of $350 billion to $400 billion by 2030, with Marvell potentially capturing around 5% to 7% share.

The analyst attributes the underestimation of Marvell's AI opportunity to its conservative outlook on processor sales, which he believes could reach $12 billion to $17 billion. He expects Amazon.com (NASDAQ:AMZN) to continue growing orders every year and Microsoft Corp. (NASDAQ:MSFT) to ramp up next year.

Arya also sees opportunities in scale-up optics, where Marvell could win regardless of how customers choose to build links. The analyst estimates that Marvell could earn $14 a share by calendar 2028, with every extra $1 billion in sales adding 30 to 35 cents a share.