Marvell FY26Q1 corresponds to the actual calendar months of February, March, and April 2025.
Marvell FY26Q1 Earnings:
Revenue of $1.895B, up 63% year over year and 4% sequentially, marking the fourth consecutive quarter of sequential growth. Q2 revenue guided at $2.0B, up 57% year over year.
GAAP gross margin of 50.3%, up 4.8 percentage points year over year. Non-GAAP gross margin of 59.8%, down 2.6 percentage points year over year and 0.3 percentage points sequentially, marking the sixth consecutive quarter of sequential decline. Q2 Non-GAAP gross margin guided at 60%, down 1.9 percentage points year over year.
Non-GAAP operating income of $647M, up 140% year over year. Non-GAAP operating margin of 34.2%, up 10.9 percentage points year over year and 0.5 percentage points sequentially. Q2 Non-GAAP operating income guided at $705M, up 113% year over year, with an operating margin of 35.3%.
Non-GAAP net income of $540M, up 161% year over year. Non-GAAP net margin of 28.5%. Q2 Non-GAAP net income guided at $586M, up 120% year over year, with a net margin of 29.3%.
GAAP days in inventory of 104 days, flat sequentially.
Repurchased $340M in shares this quarter; paid $51.8M in dividends.
Revenue mix by billing geography this quarter: China 37%, Taiwan 17%, US 16%, Singapore 9%, Netherlands 5%, Japan 2%, Thailand 2%, Finland 2%, Malaysia 2%.
Q1 Business Detail:
Data center revenue of $1.441B, up 77% year over year, representing 76% of total revenue, a new high.
Driven primarily by volume ramps from two custom silicon programs (Amazon Trainium2 XPU + Google Axion CPU). Optical business saw strong demand for 800G PAM4/400ZR DCI products. AEC began ramping. Switching chip revenue continued to grow. Began shipping 5nm 1.6T PAM4 DSP products; 3nm 1.6T product demand is very strong, but 2025 will still be dominated by 800G, with 2026 transitioning to 1.6T dominance. Exclusive supplier for a North American CSP's AI XPU (Amazon Trainium2) progressing well. Next-gen XPU development (Amazon Trainium3, potentially non-exclusive) has locked in 3nm wafer and advanced packaging capacity, targeting 2026 production. Amazon XPU revenue expected to continue growing next year and beyond.
Announced partnership with NVIDIA to integrate NVLink Fusion into its custom platforms. Marvell custom chips with NVLink Fusion provide customers a path to accelerated custom scale-up solutions. Data center AI revenue now accounts for the majority of data center revenue. Custom AI XPU shipping at scale. Future AI revenue could exceed 50% of total company revenue.
On-premise data center business remains relatively small, declined slightly in Q1, but trend is stable. Full-year custom silicon and optical businesses both expected to grow.
Enterprise networking revenue of $178M, up 16% year over year, 9% of revenue. Carrier infrastructure revenue of $138M, up 93% year over year, 7% of revenue. Both enterprise networking and carrier markets continue to recover.
Consumer revenue of $63M, up 50% year over year, 3% of revenue.
Automotive/Industrial revenue of $76M, down 2% year over year, 4% of revenue. Automotive grew sequentially; industrial declined sequentially. On April 7, Marvell announced the sale of its automotive Ethernet business to Infineon for $2.5B, expected to close within 2025. Marvell's automotive Ethernet products cover 8 of the top 10 automotive OEMs. Cumulative design wins through 2030 total ~$4B. The business would have contributed $225-250M in revenue in 2025 at ~60% gross margin.
Outlook:
Q2 data center revenue expected to grow mid-single-digits sequentially (~$1.5B, approximately 42% of Intel's data center revenue, 47% of AMD's, and 25% of Broadcom's AI revenue).
Q2 carrier and enterprise networking combined revenue expected to grow mid-single-digits sequentially.
Q2 automotive/industrial revenue expected to be flat sequentially.
Q2 consumer revenue expected to grow 50% sequentially.
Full-year business expected to grow across the board. Alongside strong AI, traditional core businesses in enterprise networking and carrier will continue to recover.
Management did not reiterate the previous full-year 2025 AI revenue target of >$2.5B (previously noted that management implied significant upside to the target but declined to raise the number. This time, management explicitly advised the Street not to fixate on data center internal splits).
AI Investor Day 2025：
2028 data center capex raised to $1.022T. Data center semiconductor TAM $494B. Accelerated compute chip TAM raised from $172B to $349B, comprising HBM TAM $128B, AI chip TAM $163B, AI companion chip TAM $58B. ASIC represents 25% of AI chip and AI companion chip TAM.
For Marvell specifically, 2028 data center TAM raised from $75B to $94B:
Data center AI chip TAM raised from $42.9B to $55.4B (5-year CAGR 53%). Company targets 20% share. Within that, AI companion chip TAM $14.6B (5-year CAGR 90%), AI ASIC chip TAM $40.8B (5-year CAGR 47%).
Data center switching chip TAM raised from $12B to $13.2B (5-year CAGR 17%).
Data center connectivity chip TAM raised from $13.9B to $19B (5-year CAGR 35%).
Data center storage controller TAM raised from $5.9B to $6.5B (5-year CAGR 9%).
Custom business pipeline lifetime revenue estimated at $75B.
The highly anticipated AI Investor Day largely met expectations. Data center capex was raised significantly, and AI chip market size was raised significantly, but the 25% ASIC penetration guidance was not raised — effectively endorsing the NVIDIA/AMD GPU camp. The introduction of the custom AI companion chip concept also tempered expectations for pure-play custom AI ASICs. The large increase in connectivity chip TAM also benefits peers like ALAB and CRDO.
Overall, the Marvell custom silicon story continues to deliver, with three consecutive quarters of volume ramps. Management remains optimistic on future growth but still refuses to provide specific financial guidance, and its ASIC vision is less aggressive than primary competitor Broadcom.
After three quarters of custom silicon ramps, Non-GAAP net margin has indeed breached 30%. Combined with guidance for other businesses, full-year revenue estimated at ~$8.8B, Non-GAAP net income ~$2.6B, implying ~23x PE at the current market cap.