Morgan Stanley adjusted its price target for Marvell following the company's latest earnings report.

Morgan Stanley raised its price target for Marvell Technology (MRVL) following the chipmaker’s improved long-term data-center growth outlook, though the bank maintained an Equalweight rating that underscores mounting valuation concerns. The firm lifted its target to $246 from $224, placing it roughly 2% above Marvell’s Thursday closing price of $241.45. The adjustment comes as Marvell now projects calendar 2027 data-center growth of 60%, up from its previous 50% estimate.

Marvell provides semiconductor infrastructure for cloud and artificial intelligence data centers, including custom compute silicon, high-speed networking equipment, and optical connectivity products. As hyperscaler AI spending accelerates, the company has increasingly emerged as a foundational “picks-and-shovels” beneficiary of the broader AI infrastructure buildout.

According to Morgan Stanley, Marvell’s latest quarterly results and forward guidance largely aligned with prior management commentary, even amid heightened expectations following the recent announcement of a partnership with Google. The bank noted that Google-related demand was already factored into Marvell’s earlier forecasts. Instead, Morgan Stanley pointed to Marvell’s strategic pivot toward a wider array of “XPU attach” businesses, optical connectivity solutions, and scale-up opportunities. This approach may provide more predictable execution than direct competition with Nvidia (NVDA) for custom ASIC contracts.

The long-term opportunity continues to expand. Marvell reported record fiscal second-quarter revenue of $2.74 billion, a 37% year-over-year increase, alongside adjusted earnings of $0.94 per share. For the upcoming fiscal third quarter, management guided to approximately $3.15 billion in revenue, plus or minus 5%, with adjusted gross margins projected between 57.5% and 58.5%.

Despite the strong numbers, shares declined sharply in premarket trading as investors weighed the compelling AI growth narrative against stretched valuations and a potentially less favorable margin mix. Morgan Stanley’s revised target and unchanged rating encapsulate this central tension: fundamentals are accelerating, yet market expectations are already elevated. Investors will be monitoring whether Marvell can deliver on its new 60% data-center growth projection while preserving gross margins as custom silicon production scales. The next key catalyst arrives on October 6 during the company’s Investor Day, where management is expected to outline its extended AI infrastructure strategy and primary growth drivers.