May 26 (Reuters) – Shares of Marvell Technology rallied on Friday after its chipmaker Nvidia Corp (NVDA.O) became the latest company to forecast a significant increase in revenue from the AI boom. It surged about 23% on Friday. technology.
The gain was expected to add nearly $10 billion to Marvel’s market value as investors chase exposure to AI to counter weaknesses in many tech companies’ traditional services and products.
Marvell CEO Matt Murphy said on the post-earnings call, referring to one of the company’s largest segments, “Generative AI is rapidly driving new applications and driving cloud customers’ investment priorities. is changing,” he said.
Considering the speed of progress in AI infrastructure, the technology’s refresh rate is 18 to 24 months, compared to four years or more for standard infrastructure, he said.
The company forecast Thursday that sales from AI-based products will double this year.
Nvidia on Wednesday forecast second-quarter sales to outpace average Wall Street forecasts by more than 50% and said the second half of the year would see a higher supply of AI chips, pushing the company’s shares up 24% on Thursday.
At least 17 brokerages have raised their price targets on Marvel, with a median price target of $65, suggesting the stock is up 31% from its previous close.
“Results and guidance confirm that the team is navigating this recessionary trough,” JPMorgan analysts said.
The brokerage expects increased demand from areas such as 5G, automotive and AI-based products to offset weaknesses in enterprise networking, wireline operators and legacy data centers.
Cloud computing giants Microsoft (MSFT.O) and Alphabet (GOOGL.O) are adding the latest AI technology to their offerings in hopes of boosting demand as the economic slowdown drags growth. .
Reported by Yuvraj Malik of Bangalore.Editing: Sriraj Karvilla
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