Why Marvell’s 19% Drop Could Be a Big Buy-the-Dip Opportunity

Key Points

• Marvell's Q2 revenue and EPS were solid, but slightly missed data center expectations.
• Q3 guidance was underwhelming, but skewed by a completed divestiture that distorted numbers.
• Long-term AI growth remains intact, with 50+ custom chip opportunities and strong analyst support.

Over the last few years, Marvell Technology NASDAQ: MRVL has become one of the in-vogue stocks among investors when it comes to placing bets on the artificial intelligence (AI) revolution.

Marvell challenges a dominant player in AI, competing against Broadcom NASDAQ: AVGO in custom silicon. Known as application-specific integrated circuits (ASICs), these chips are custom-made to fit the needs of a specific customer and are often applied to AI workloads.

However, Marvell's latest earnings report was less than impressive. After the firm’s Q2 fiscal 2026 earnings, released on Aug. 28, shares of the chip stock plummeted by nearly 19% as the market reacted to what seemed like underwhelming numbers. Yet a closer look reveals that the selloff may be more emotional than rational.

Marvel's Revenue Miss Was Real, but Overstated

Marvell posted Q2 revenue of $2.006 billion, just slightly below analyst estimates $2.01 billion. For a company of Marvell’s size, a less-than-$4-million miss feels almost negligible. Marvell’s adjusted earnings per share (EPS) of 67 cents were right on the dot. 

The biggest contributor to the stock’s fall was the fact that it missed revenue expectations in its most important segment: data centers. Sales came in at $1.49 billion, while analysts were looking for over $1.51 billion.

Another issue was Marvell’s Q3 guidance. The company expects $2.06 billion in sales at the midpoint, which implies nearly 37% growth. But this figure was largely seen as a disappointment, with analysts looking for around $2.11 billion in revenue.

A key caveat is that Marvell is selling its automotive Ethernet business and it completed the transaction sooner than expected. The company explained that if this had not happened, revenue guidance for Q3 would have been $60 million higher, which would be in line with or slightly above analyst estimates.

Custom Silicon Headwinds Mask Long-Term Strength

Marvell’s custom silicon business is both a strength and a source of volatility, and the company's statements about it were also somewhat disappointing. The firm expects revenue to decline sequentially in Q3 but that Q4 will be “substantially stronger” than Q3. 

One of the biggest worries surrounding Marvell is its overreliance on Amazon.com NASDAQ: AMZN as a buyer in its custom silicon business. There are also fears that Microsoft NASDAQ: MSFT may delay its custom chip rollout with Marvell, and that smaller competitors are encroaching on Marvell’s Amazon relationship.

But much of this was already known before earnings. The real story is that Marvell continues to win new business. In Q2 alone, it secured multiple new custom silicon design wins, adding to the 18 it announced at its Custom AI Investor Event in June. These wins show Marvell is diversifying its customer base, a critical step toward derisking its AI exposure. It is also a clear sign its future pipeline is strong, even if near-term revenue sees some softness.

Analyst Forecast Suggests a Buy-the-Dip Opportunity 

After Marvell’s earnings, many Wall Street analysts downgraded their price targets on the stock. The average of those updated price targets is just under $91 per share—very similar to the MarketBeat consensus price target of $90.50—which implies around 40% upside. That is substantial, suggesting that Marvell’s big fall could be an opportunity for investors.

What’s more, the price target downgrades averaged a drop of around 8%. That is less than half of the 18.6% drop that the stock experienced on Aug. 29. That disconnect suggests the market may have overcorrected.

Although shares recovered around 3% on Sept. 2, there is reason to believe that Marvell’s recent drop represents a notable buying opportunity. However, it is important that investors are aware of increasing competition in the space. This puts Marvell in a somewhat precarious position as it is not the dominant player in custom silicon. That title belongs to Broadcom, which remains the safer long-term bet due to its scale and deeper hyperscaler relationships.