After delivering a lackluster outlook for the fiscal first quarter of 2024, Marvell Technology (MRVL) is down 7% in Friday morning trading. The company has surged over the past year thanks in large part to the AI craze, but the rest of the business is struggling.

For the fiscal fourth quarter, overall revenue came in at $1.43 billion which narrowly outpaced the $1.42 billion analysts were expecting. This was also a 1% growth year over year. This was driven by a 38% sequential growth in its data center business, which picked up the slack for underperformance elsewhere.

The company lost $392.7 million on a net basis, which came out to 45 cents per share. This was much wider than the year prior in which Marvell posted a loss of just $15.4 million or 2 cents a share. But, this worked out to 46 cents/share on an adjusted basis, which fell right in line with the Wall Street outlook.

All that being said, the downtrodden guidance for Q1 stole the spotlight. Marvell is only forecasting revenue of $1.15 billion, well below the $1.38 billion analysts are calling for according to FactSet. Earnings are poised to disappoint as well with guidance of 18 cents to 28 cents well below the 41 cents consensus.

While AI and standard cloud data centers are carrying the weight for Marvell, the rest of the business is pressured. Specifically, demand for consumer/carrier infrastructure and enterprise networking is softening.

However, chief executive Matt Murphy says that this will be a short-term obstacle that should be in the past by the second half of the year. 

In fact, he is optimistic about the opportunities ahead. Growth in generative AI applications will mean more data center customers for the semiconductor company. Murphy also sees potential for an increased investment in inference.

While the stock is down today, MRVL is still up 33% so far this year and has nearly doubled since this time last year. So, is this just a temporary speed bump that investors should sit patiently through, or is there more reason to be concerned?

We’ve taken a look through the VectorVest stock analysis software and found 3 things you need to see before you make your next move either way.

MRVL May Have Very Poor Upside Potential, But it Still Has Very Good Safety and Excellent Timing

VectorVest saves you time and stress while empowering you to win more trades with less work. It’s all based on a proprietary stock rating system that’s comprised of 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. Better yet, you’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for MRVL:

  • Very Poor Upside Potential: The RV rating draws a comparison between a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. As for MRVL, the RV rating of 0.27 is very poor.
  • Very Good Safety: The RS rating is a risk indicator, calculated from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 1.30 is very good for MRVL.
  • Excellent Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year. Despite falling today, MRVL still has an excellent RT rating of 1.60.

The overall VST rating of 1.25 is good for MRVL, but the stock is still rated a HOLD for the time being. Whether you’re currently invested in this stock or are trying to find your entry point, we invite you to learn more about the situation with a free stock analysis

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VectorVest advocates buying safe, undervalued stocks, rising in price. MRVL is forecasting a weak first quarter, but still sees reason to be optimistic in the longer term. Despite falling 7% today the stock has been on an impressive surge. It may have very poor upside potential, but its safety is very good and its timing is excellent.

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