Marvell Data Center Business estimates that business is not effective, and stock prices plummeted 18%

Semiconductor manufacturer Marvell's U.S. stock price plummeted 18%, mainly because the data center's business failed to meet analyst estimates and the outlook for financial measurement this quarter was weak.

The second quarter financial report roughly meets general market expectations, with an adjusted EPS of 67 cents, slightly higher than the estimated 66 cents. Plus, the revenue was $2.01 billion, which matched the expectations. The net profit was $194.8 billion, or EPS came to 22 cents, a significant improvement compared to the net profit of $193.3 billion (22 cents for EPS) in the same period of the previous year.

Marvell executive Matt Murphy said in a latest statement that the second quarter ended August 2 had a significant growth of 58% compared with the same period in the previous year, creating company records, benefiting partly from strong artificial intelligence needs for its custom silicon and electro-optics products. However, the revenue performance of the Data Center department was disappointing, with revenue reaching only $1.49 billion, lower than the market expectations of $1.51 billion. In addition, Marvell's third-quarter closing outlook was US$2.06 billion (5% up and down), slightly lower than the US$2.11 billion predicted by market analysts, which is the main reason for the sharp drop in stock prices.

Executive Director Matt Murphy and the Investors Conference said that the overall data center revenue in the third quarter will be the same as last quarter, due to the non-linear growth of the customized AI chip business. He noted that this expected volatility is due to the normal phenomenon of large, super-large cloud suppliers when building foundation facilities. Despite this, Matt Murphy still expects to grow in the next fourth season, which will be more realistic than season three.

Market analysts expressed concern because of the lack of more details about new customers, and it was difficult for them to recognize the company's 20% data center market share target. Among them, the U.S. bank therefore adjusted investment equality in Marvell's stock to "neutral" from "buy" and reduced its target price from $90 to $78, partly due to doubts about the company's recent and medium-term AI growth prospects.

Marvell is known for providing customized chip and hardware solutions to cloud service providers such as Amazon and Micro. Although overall financial performance in the second quarter is still acceptable, the data center revenues failed to meet expectations and relatively weak short-term financial measurements have caused investors to worry about their short-term growth, resulting in a sharp drop in stock prices. The closing price in the U.S. stock market in the early morning of the 30th reached US$62.86 per share, down US$14.37, or 18.6%.