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FollowingCore Points
The semiconductor industry generally weakened, with Marvell Technology (MRVL) shares falling sharply in pre-market trading. Despite the market volatility, Bank of America maintained its "buy" rating on the stock and set a higher price target to be optimistic about its long-term growth potential.
Marvell Technology's share price fell sharply due to comments about slowing AI development.
Marvell Technology's (MRVL) share price plunged 7.6% before Monday's market. The sharp fluctuations stem from an article published over the weekend by Anthropic CEO Dario Amodi, in which he called for a pause on the development of cutting-edge artificial intelligence and advocated prudent progress. Subsequently, OpenAI's Sam Altman and Elon Musk publicly supported Amodei's views, exacerbating market concerns about a possible decline in demand for artificial intelligence chips.
This concern quickly spread to the entire semiconductor industry. Chipmakers in Asia and Europe both suffered significant losses in overnight trading, with the technology-dominated Nasdaq index falling 1.9%, highlighting the industry concentration of the sell-off. In contrast, the declines in the S & P 500 and Dow Jones Industrial Average were more moderate. It is worth noting that funds flowed out of the hardware and semiconductor sectors and shifted to corporate software stocks, making them perform relatively strongly.
In addition, the upcoming federal interest rate decision has also increased market pressure. Central bank action is widely expected, and highly valued technology stocks are generally more sensitive to this. Marvell Technology, as a target with a premium valuation, is particularly vulnerable in this context.
Bank of America's stance: Maintain a "buy" rating with a price target of $365
Despite market turmoil, Bank of America has not wavered in its optimistic view. After meeting with Marvell CEO Matt Murphy and Chief Financial Officer Dan Durn, the bank reiterated its "buy" rating on MRVL and set a price target of $365. Compared with MRVL's close of US$236.10 on September 11, this target price represents about 55% upside.
Analyst Vivek Arya's confidence comes not only from custom processors, but also from Marvell's other complementary chip products. These chips, which are responsible for connection, memory management and data transfer, are difficult for customers to develop themselves. Currently, Marvell supplies these components to all four major U.S. cloud service providers, and each custom chip usually needs to be paired with one or two ancillary products, priced between $500 and $1,500.
Bank of America predicts that by the end of this decade, the market size of these auxiliary chips may exceed US$60 - 65 billion. If Marvell can occupy a 40-50% market share, this segment alone will bring it approximately US$30 billion in annual revenue, far exceeding management's forecast of more than US$3 - 4 billion in 2028. Including custom processors, BofA expects the Combined Revenue Opportunity to reach US$40 - 45 billion by 2030.
Potential risks and competitive challenges
However, significant risks remain. Bank of America pointed to uncertainty about Amazon and Microsoft's next-generation chip projects as a key factor. Any postponement could delay revenue recognition and weaken the growth trajectory that underpins current valuations.
Broadcom is a major competitor in the field of customized chip development. Although Google partnerships are often seen as strategic milestones, their operating model is based on procurement-linked structures rather than rigid commitments. In addition, approximately 59 million warrants may be exercised, introducing potential shareholder dilution risks.
Market attention has turned to MRVL's Analyst Day event scheduled to be held on October 6. Participants will seek specific details on production schedules, profit forecasts and customer deployment plans. Prior to the correction, MRVL shares had risen more than 160% in the past six months, and in the same period ended September 11, it rose nearly 12%, outperforming Nvidia, which fell more than 5% over the same period.
