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Marvell Technology (MRVL) is a leading player in custom ASIC (Application-Specific Integrated Circuit) solutions, providing high-performance chips essential for sectors such as data centers, 5G infrastructure, the automotive industry, and networking.

With its stock currently trading around 10% below its 52-week high, many analysts believe Marvell is primed for a new rally that could push it to all-time highs. Here are three reasons why this is a real possibility.

Expanding AI and custom ASIC potential

Marvell is increasingly focused on providing hardware solutions for artificial intelligence (AI) and machine learning applications.

One of the key drivers of this expansion is its collaboration with Amazon Web Services (AWS), where it may ramp up production of its new Trainium2 chip.

AWS CEO Matt Garman has emphasized the company’s plans to expand its AI and machine learning capabilities, which is expected to boost demand for Marvell’s custom chips and positively impact its revenue.

But AWS isn’t Marvell’s only major partner.

The company is also working with Alphabet on Arm-based processors, a collaboration that is still in its early stages.

Analysts believe that this partnership has not yet been fully valued. If Alphabet scales its program in the future, Marvell could see a significant increase in revenue.

Similarly, Microsoft’s partnership with Marvell, driven by OpenAI’s demand for custom ASIC solutions, further supports the company’s growth potential in the AI space.

Recovery in non-AI segments

While AI offers significant growth potential, Marvell’s non-AI business shouldn’t be overlooked.

The company experienced a challenging first half of the year, with weaker-than-expected demand for networking equipment and carrier infrastructure.

However, Marvell believes this downturn has bottomed out and anticipates a recovery in the second half of the year.

If this rebound materializes, Marvell’s non-AI revenue could hit the $2 billion mark, which would be a positive signal to analysts and investors alike.

Achieving this level could prompt price target upgrades, further boosting investor sentiment and the stock’s performance.

Strong sales data driving short-term optimism

Marvell is also benefiting from strong sector-wide sales data, which has exceeded analysts’ expectations.

In August, global semiconductor sales grew 21% year-over-year (YoY) to over $53 billion.

While Marvell holds a smaller share of this market, it is likely to be a beneficiary of this trend when it reports earnings next month.

According to John Neuffer, CEO of the Semiconductor Industry Association, YoY semiconductor sales in the Americas surged by 43.9%, marking the largest percentage increase since April 2022.

Month-to-month sales were also up across all regions for the first time since October 2023.

Additionally, the semiconductor sector has seen five consecutive months of growth, boosting optimism across the industry.

Marvell’s stock has already rebounded by nearly 50% from its August lows, though it is currently trading at levels it has maintained since February.

This suggests that the market is valuing the stock conservatively based on its existing fundamentals.

However, if the positive triggers mentioned above are confirmed, Marvell could experience a breakout, making it an attractive buy at current levels.

Marvell Technologies is well-positioned for a rally, driven by its expanding AI and custom ASIC potential, a recovery in its non-AI segments, and strong sales data across the semiconductor industry.

Investors should keep a close watch on these factors as the stock gears up for its next bull run.

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