Marvell Rebounds as AI Computing Demand Strengthens Prospects

(Bloomberg) — Marvell Technology Inc. rose in late trading after the chipmaker delivered better-than-expected results and an upbeat profit forecast, citing demand for artificial intelligence.

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Third-quarter profit was 43 cents per share (excluding some items), the company said in a statement Tuesday. That beat analysts’ average estimate of 41 cents. On this basis, Marvell expects a profit of up to 64 cents in the current period, well above the forecast of 52 cents.

Chief Executive Officer Matt Murphy has positioned the chipmaker to benefit from an industry-wide increase in AI spending. While Marvell doesn’t sell the highly prized AI accelerators that Nvidia Corp. have made it the most valuable company in the world, but offers other components used by cloud computing providers to develop advanced services.

“The exceptional third quarter performance and our strong fourth quarter guidance are primarily driven by our custom AI silicon programs, which are now in mass production,” Murphy said in the statement.

Shares rose nearly 9% to $104.35 in extended trading after the results were released. They were up 59% this year through Tuesday’s close.

Marvell expects revenue of about $1.8 billion in the fourth quarter, which runs through January. That compares to an average estimate of $1.64 billion, according to data compiled by Bloomberg. Third-quarter revenue rose 7% to $1.52 billion, beating forecast of $1.45 billion.

Murphy, who became CEO in 2016, is now a potential contender to lead Intel Corp. The company has turned to the executive as part of its search for a new leader after Intel CEO Pat Gelsinger was ousted this week, Bloomberg News reported Tuesday.

(Updates with additional results in sixth paragraph.)

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