In-Line Q2, Soft Guide: Marvell Drops on Custom-ASIC Lull

Moomoo Insights wrote a column · Aug 28, 2025 22:13

In-Line Q2, Soft Guide: Marvell Drops on Custom-ASIC Lull

This year's second-worst performer in the $PHLX Semiconductor Index (.SOX.US)$ , AI-ASIC giant $Marvell Technology (MRVL.US)$ reported FY2026 Q2 after the bell; the stock fell more than 11%. Here's what happened.

Q2 Core Financial Indicators

– Revenue: $2.01 billion, +58% YoY, +6% QoQ, slightly below consensus.

– Gross Margin: GAAP 50.4% (+4.2ppt YoY, +0.1ppt QoQ), non-GAAP 59.4% (−2.5ppt YoY, −0.4ppt QoQ), both a touch below the prior guidance high end.

– Profit: GAAP net income ~$190 million, slightly above prior indications; non-GAAP net income $590 million, in line with guidance, +120% YoY, +8% QoQ.

Q2 Revenue Breakdown by Platform

– Data Center: $1.49 billion, +69% YoY, +4% QoQ; 74% of total—Marvell's largest business.

– Enterprise Networking: $194 million, +28% YoY, +9% QoQ; 10% mix.

– Carrier Infrastructure: $130 million, +71% YoY, −6% QoQ; 6% mix.

– Consumer: $116 million, +30% YoY, +84% QoQ; 6% mix.

– Auto/Industrial: $76 million, roughly flat YoY/QoQ; 4% mix. The $2.5B sale of the Automotive Ethernet unit to $INFINEON TECHNOLOG (IFNNY.US)$ closed in Q3, and Marvell noted only a mid-single-digit-million contribution from that business before closing. Management expects Auto/Industrial revenue to be much smaller next quarter.

Two Things to Watch

1. ASIC momentum is soft near-term; data-center growth is driven by electro-optics, and full-year AI guidance was not raised

Recent data-center growth is largely from electro-optics. Previously, Marvell indicated electro-optics at roughly 50% of data-center revenue, ASIC ~25%, with the rest from storage, switching and security; all of these posted growth this quarter.

The interconnect stack spans DSPs for AEC/AOC, PCIe/Ethernet/UA-Link retimers, and silicon-photonics for near-/co-packaged XPU optics. AEC/AOC DSPs are shipping, and retimers are in customer evaluation/sampling.

While management expects data-center ASIC to be soft in Q3 and stronger in Q4, it did not lift the full-year AI revenue “>$2.5B” outlook. Management also reiterated 18 multi-generation XPU and XPU-attach design wins and 50+ new pipeline opportunities, alongside a goal to raise data-center share from ~13% of a $33B TAM (CY24) to **20% of a $94B TAM by CY28.

2. Strategy shifts to "All-in Data Center"; reporting realigned in Q4

Given data center's sustained >70% mix and faster growth, from Q3 Marvell will roll all non-data-center end markets into a single "Communications & Other" bucket, reporting two lines going forward: Data Center and Communications & Other.

Q3 Guidance

– Revenue: $2.06 billion (±5%), +36% YoY, +3% QoQ—below the $2.11B Street consensus.

– Non-GAAP gross margin: ~60%; non-GAAP operating income: $750 million; non-GAAP net income: $640 million (+73% YoY; +10% QoQ).

Summary

Overall, the print fell short of market expectations, with lumpy ASIC seasonality frustrating investors. Management leaned on long-term targets to soothe nerves, but the market clearly wasn't convinced. The pace of the ASIC ramp remains the single most important swing factor for Marvell.

Check out moomoo's past insights on MRVL:

Marvell FY26Q2 Earnings Preview: Anxious Eyes on AI ASIC Growth

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