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Marvell Technology (MRVL) stock dropped 7% after an analyst downgrade cited concerns about losing Amazon‘s Trainium 3 and 4 chip designs to Alchip Technologies.
Data center revenue represents 73% of Marvell’s total sales and surged over 80% year-over-year. Losing Amazon or Microsoft as customers could trigger double-digit growth declines.
Marvell executives stated they see no revenue disruptions from Amazon in fiscal 2026. The company projects data center revenue could double by 2028.
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Marvell Technology‘s (NASDAQ:MRVL) stock tumbled 7% yesterday, erasing recent gains on increasing investor jitters about its position in the artificial intelligence (AI) chip sector.
What caused the decline was a downgrade from Benchmark analyst Cody Acree, who shifted his rating on Marvell stock from buy to hold, citing his “high conviction” that the chip designer had lost Amazon‘s (NASDAQ:AMZN) next-generation Trainium chip business. He said sources indicated Marvell lost the designs for the Trainium 3 and 4 AI chips to Taiwan-based rival Alchip Technologies, which would be a significant blow to Marvell.
This came on the heels of a Friday report from The Information, which said Microsoft (NASDAQ:MSFT) is exploring Broadcom (NASDAQ:AVGO) as a potential chip design partner. The market has pinned much of Marvell’s growth hopes on its role in Microsoft’s Maia-2 AI accelerator. With hyperscalers driving explosive demand for custom silicon, these whispers of customer defections have sparked fears that Marvell’s AI momentum could stall just as it was accelerating.
Marvell doesn’t disclose precise revenue splits by individual clients, a common practice among chipmakers shielding their competitive edge, but the stakes are substantial: Data center revenue — fueled by powerhouse customers like Amazon, Microsoft, Google, and Meta Platforms (NASDAQ:META) — accounts for roughly 73% of Marvell’s total sales.
This segment has been the engine of Marvell’s revival, surging over 80% year-over-year in its latest quarter amid the AI boom. Losing even one major account could slash growth projections by double digits, forcing reliance on smaller wins or enterprise storage, which lag in margins and scale. Dropping two, such as Amazon and Microsoft, could trigger a devastating revenue cliff, echoing the cyclical slumps that plagued Marvell before AI.
The math is unforgiving. Hyperscalers aren’t just buyers; they’re co-design partners, locking in multi-year roadmaps for XPUs (AI accelerators) and networking silicon. Amazon alone has been Marvell’s largest XPU customer, with Trainium chips powering its in-house AI training. Microsoft’s Maia program, rumored to leverage Marvell’s expertise, was eyed as a multi-billion-dollar lifeline through 2028. If these evaporate, Marvell’s fiscal 2026 guidance — already banking on 40% data center expansion — could unravel, dragging shares back toward pandemic lows.
However, these concerns about Amazon and Microsoft are not new either, having plagued Marvell all year.
Despite the fearmongering, Acree’s call carries a big caveat as he admits it is a “controversial” one. There have been no official announcements from Amazon, Microsoft, or Marvell to back the claims, only”sources” feeding rumor.
During its earnings call last week, Marvell’s executives flatly dismissed near-term disruptions, stating they see “no air pockets” in Amazon revenue for fiscal 2026. Orders remain visible and robust, buoyed by ongoing Trainium 2 production and satellite projects like Kuiper.
Even Acree concedes there is longer-term upside for the chip designer. Marvell expects its XPU business to reaccelerate in fiscal 2028 through fresh engagement with an “emerging hyperscaler.” That program, according to Acree, ramps up meaningfully afterward, potentially offsetting any Trainium setbacks.
Other analysts think the concerns are overblown. TD Cowen‘s Joshua Buchalter highlights Marvell’s bullish 2028 outlook, projecting data center revenue could double from current levels. He flags the recent Celestial AI acquisition — adding photonic interconnect technology to Marvell’s portfolio — as a strategic edge for high-bandwidth AI clusters.
On Microsoft, the consensus tilts toward Marvell winning the Maia-2 business. The Broadcom rumors, while concerning, stem from early-stage talks, and Marvell’s custom silicon track record gives it the pole position on winning.
With Synopsys (NASDAQ:SNPS) licensing SerDes tech to Amazon, Marvell’s exposure is nuanced, not a total loss even if it happens. Look at it as a pivot to adjacent channels like networking.
Marvell’s selloff looks the part of an overreaction. At less than 26x forward earnings, a PEG ratio of 0.58x, and Wall Street’s 45% long-term EPS growth forecast — matching Nvidia‘s (NASDAQ:NVDA) multiples and growth estimates — this is a buy-the-dip opportunity.
Hyperscalers evolve fast, but Marvell Technology’s entrenched role in AI infrastructure still positions it for the next wave.
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