Earnings Call Highlights: Marvell (MRVL) | FY26 Q4
1. Summary | Marvell sharply raises revenue guidance, signaling AI infrastructure has entered an "explosive growth phase"
Marvell delivered a strong FY26 Q4 with revenue of $2.219B, lifted by robust data center demand. What excited the market most was management's significant upgrade to revenue expectations for the next two years: FY27 revenue guidance was raised from $10B three months ago to $11B (YoY >30%), and FY28 now targets $15B (YoY ~40%), at which point EPS will exceed $5. Growth comes from "three arrows": the generational transition in 800G/1.6T optical interconnect, the ramp of custom silicon at Tier 1 cloud providers, and the scale-up networking architecture built through the acquisitions of Celestial AI and XConn.
2. Financials (non-GAAP)
Revenue: $2.219B (QoQ +7%, YoY +22%).
Gross margin: 59.0% (QoQ -160 bps, mainly due to product mix).
Operating margin: 35.7%.
EPS: $0.80 ($0.10 above the guidance midpoint).
Opex: $517M.
CapEx: To support revenue growth, inventory rose to $1.39B.
Segment revenue:
Data Center: $1.5B (QoQ +9%, YoY +21%), 74% of total revenue.
Enterprise/Carrier/Other: $567M (QoQ +2%).
3. Outlook (FY27 Q1 / full year)
Q1 revenue guidance: $2.4B ± 5% (QoQ +8% at the midpoint).
Q1 gross margin: 58.25% - 59.25%.
Q1 EPS: $0.74 - $0.84.
Full-year targets: FY27 revenue close to $11B, FY28 revenue target of $15B. Revenue is expected to grow every quarter, with FY27 Q4 revenue expected to exceed $3B.
4. Product updates
Interconnect
800G / 1.6T PAM4: 800G demand remains solid, while 1.6T products entered volume production in FY26 Q4 and are expected to ramp quickly in FY27. Marvell was the first to productize 200G/lane technology and has already demonstrated 400G/lane technology to position for the future 3.2T market.
Coherent optics: For 2-20km data center interconnect (DCI), the first-generation 1.6T product has shipped.
Scale-across (DCI): Expects to supply DCI modules to all five major US hyperscalers this year. Launched the industry's first 1.6T ZR/ZR+ DSP on a 2nm process.
Switching
Scale-out: 51.2T product line ramping, lifting FY27 switch revenue expectations from $500M to more than $600M.
Scale-up (UALink/PCIe): The XConn acquisition strengthens PCIe Gen 6 and CXL 3.1 technology; Marvell expects to sample a 115T UALink solution in 2H FY27, contributing revenue in FY28.
Custom Silicon (custom compute)
Revenue contribution: FY26 revenue reached $1.5B (doubling YoY), with >20% growth expected in FY27; in FY28, as the next-generation XPU ramps, revenue could double again.
XPU attach: Includes custom NICs and CXL expanders. These two businesses are expected to contribute more than $2B in revenue in FY29.
5. Looking ahead
Rise of the scale-up market: As AI clusters grow, GPU-to-GPU interconnect (scale-up) becomes the new bottleneck. Through the Celestial AI acquisition, Marvell is positioning in CPO (co-packaged optics), expecting an annualized run rate of $500M in 2028, doubling to $1B in 2029.
Advanced technology roadmap: Core products are moving entirely to 2nm and below, using technology leadership (such as 200G/lane SerDes) to sustain high ASPs.
Acquisition synergies: Celestial AI and XConn are expected to contribute a combined ~$250M of revenue in FY28.
6. Key Q&A takeaways
Core question: Are custom silicon customers too concentrated?
Management: Although the top four hyperscalers account for most CapEx, Marvell's product mix across each customer (optics, switching, custom silicon) is highly diversified, and no single custom chip makes up an extreme share.
Core question: How fast is 1.6T adoption?
Management: Early 1.6T demand has exceeded expectations, mainly because the attach rate with new-generation GPUs/XPUs has risen, and ASPs are significantly higher than the previous generation.
Core question: Are there supply-side bottlenecks?
Management: For AI-related advanced packaging and large substrates, Marvell has given suppliers multi-year forecasts and has already secured capacity for FY27 and FY28.
7. Risks and watch items
Advanced packaging capacity: Although capacity is booked, any supply chain misstep in CoWoS or large substrates would affect shipments.
Intensifying competition: Faces direct competition from rivals such as Broadcom in custom XPUs.
Gross margin volatility: As the share of the lower-margin custom business rises, it remains to be seen whether overall gross margin can hold near 60%.
8. Bottom line
One-line positioning: Marvell is in a "sweet spot of explosive growth" as it shifts from a pure component supplier to a full-solution leader in AI interconnect and compute.
Core moat: The industry's most complete connectivity IP portfolio (from optical DSPs to high-performance SerDes) and its lead in moving first to 2nm.
Investment conclusion: Twin engines of "generational upgrade (1.6T)" and "new market expansion (custom XPU/CPO)". Management's rare two-year long-term growth guidance (FY28 $15B) signals very high order visibility, leaving room for further valuation upside.
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