Marvell Technology posted better-than-expected fiscal second-quarter results after Thursday's close, yet the stock fell sharply in response, dropping more than 8% as investors concentrated on when revenue from the company's recently announced Google AI-chip agreement would begin to materialize.

The reaction highlights how demanding the market has become for AI-infrastructure suppliers. Marvell, which designs custom silicon and interconnect products for large cloud providers, has seen its valuation increasingly tied to expectations for custom AI accelerators, where it competes for hyperscaler design wins alongside suppliers such as Broadcom. In that environment, beating estimates and raising long-term targets is not always enough if near-term AI revenue timing lags what investors had priced in.

The key figures from the quarter were as follows:

• Adjusted EPS: $0.94 versus $0.92 expected
• Revenue: $2.739 billion versus $2.71 billion expected, up 37% year over year and 13% from the prior quarter
• Data-center revenue: $2.172 billion, up 46% year over year and 18% quarter over quarter
• Adjusted gross margin: 58.9%
• Operating cash flow: $605.5 million

Guidance for the third quarter included revenue of $3.15 billion, plus or minus 5%; adjusted EPS of $1.10, plus or minus $0.05; and an adjusted gross margin of 57.5% to 58.5%.

Marvell also raised its longer-term outlook. The company now expects fiscal 2027 revenue of approximately $12 billion, representing growth of roughly 45%, compared with its previous projection of $11.5 billion. Fiscal 2028 revenue is now expected to reach approximately $18 billion, up from the prior estimate of $16.5 billion. Management said AI-related bookings remain exceptionally strong, with custom-chip revenue expected to accelerate during the second half of the current fiscal year. That second-half acceleration is central to the bull case: the Google agreement's contribution is expected to build over time rather than arrive all at once, which is precisely the timing question investors were wrestling with in this reaction.

Despite the strong results and the raised outlook, the market was looking for a bigger and faster payoff from the Google agreement. The decline appears less like a rejection of Marvell's AI growth story and more like a reset of extremely elevated expectations. It also fits a broader pattern this earnings season in which AI-linked chipmakers have seen sharp post-earnings swings even after reporting solid growth, as traders reposition around the pace—rather than the existence—of AI revenue.

On the technical side, the post-earnings decline took the price as low as $219.10 after an earlier session high of $228.88. On the hourly chart, the rebound that followed the gap lower stalled near the rising 100-hour moving average at $229.66, keeping sellers in control and leading to the subsequent move to the session low.

So far, the decline has held above the rising 200-hour moving average at $214.29. Below that, the 100-day moving average offers another key support level at $211.34.

For buyers to regain greater control, the price would need to move back above the 100-hour moving average at $229.66. Just above that level sits the broken 38.2% retracement of the rally from the February 2026 low to the June 2026 high, at $230.70. A sustained move above both levels would provide buyers with some relief and could open the door to a broader rotation to the upside.

Conversely, a break below the 200-hour moving average at $214.29—followed by the 100-day moving average at $211.34—would strengthen the bearish technical bias and give sellers greater control.

With the price positioned between these two technical levels, the market's reaction to those levels is notable. Traders can define and limit risk against a level they believe in, or that the market broadly believes in; if the price reacts at those levels, it can be assumed that the market has confidence in them. As it stands, the price sits in a neutral zone between the moving averages and the retracement levels.

Source: Investinglive