Key Points
Nvidia (NASDAQ: NVDA) CEO Jensen Huang isn’t shy about telling investors what stocks to buy. He is well-connected in the chip industry and knows which companies have great products and are destined for success. His recent prediction is that Marvell (NASDAQ: MRVL) will be the next $1 trillion company.
That’s no small bet, as Marvell is currently a $220 billion company. So, if Huang is right, he’s basically telling investors about a stock that can nearly 5x. That’s a great gain and is well worth looking into, but what makes Marvell so special?
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
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Marvell and Nvidia are frenemies
The one thing you have to give Huang credit for is that he’s propping up a company that Nvidia is outright competing against in one area, yet supporting in another. Marvell has many products, but the ones that get investors most excited are its application-specific integrated circuits (ASICs) and its high-speed networking chips.
On the ASIC front, Marvell helps Amazon design its custom AI chips for Amazon Web Services, which is an outright competitor to Nvidia’s GPUs. However, that’s not where Huang is focused.
Instead, Huang recognizes Marvell’s networking chips as best-in-class and announced a partnership with Nvidia to ensure that Marvell and Nvidia’s technology are compatible with each other. This secures Nvidia’s compatibility in future data centers as Marvell’s connectivity infrastructure coexists alongside Nvidia’s computing products.
This shows that the AI arms race isn’t a winner-take-all event. Instead, there will be several companies that are winners, allowing investors to profit from all sorts of companies. But Marvell still has a way to go before reaching the $1 trillion club. For Marvell to join the $1 trillion club, it needs a stock price of $1,140. If we assign an arbitrary 30 times earnings valuation as a reasonable price tag for a big tech stock involved in the AI build-out, then Marvell would need to generate earnings per share of $38. For its current fiscal year (FY) 2027 (ending January 2027), Wall Street estimates it will generate about $4.05 in EPS.
So, Marvel must undergo some major growth before it reaches the $1 trillion level at a reasonable valuation. We’ll see how Huang’s projection pans out, but for Marvell to be “the next” $1 trillion company is likely not happening anytime soon. However, it could reach that point someday if it can continue partnering with leading AI companies and deliver solid results over the long term.
Should you buy stock in Marvell Technology right now?
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Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.
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