Marvell Technology (MRVL) shares closed sharply higher Thursday, rallying 7.27% to $310.58, as investors reacted to news that Amazon Web Services (AWS) is in early-stage discussions to offer its Trainium artificial intelligence chips to third-party data center operators. The potential expansion of Amazon's custom silicon business is seen as a significant catalyst for Marvell's high-speed networking and custom chip design operations.
According to reports from Bloomberg and TechCrunch, AWS has initiated talks with potential external customers about selling Trainium processors, which are purpose-built for AI training and inference workloads. Amazon CEO Andy Jassy had previously indicated that the company's chip business is already generating over $20 billion annually, and that opening sales to outside buyers could potentially push that figure toward $50 billion. Jassy noted the possibility of selling racks of chips to third parties, signaling a broader strategic shift.
KeyBanc Capital Markets responded by raising its price target on Marvell to $385 from $260, while maintaining an Overweight rating. Analyst John Vinh highlighted that data-center networking represents the most significant and durable growth opportunity for the company. The revised target implies roughly 24% upside from Thursday's close.
Marvell is also set to join the S&P 500 index before the open on Monday, June 22, replacing Pool Corp. in the latest quarterly rebalance. Index inclusion typically triggers passive fund buying, providing additional support for the stock. Nasdaq is closed Friday for Juneteenth, so the index change takes effect at the next available trading session.
In a separate development, Marvell and Tower Semiconductor announced that they have shipped over five million coherent photonic integrated circuits to Marvell customers. These optical chips use light to transmit and process data, offering faster speeds and lower power consumption compared to traditional electrical signals for certain data-center interconnects. Radha Nagarajan, Marvell's senior vice president and chief technology officer for optical engineering, called the milestone a testament to the strength of their collaboration.
Marvell reported fiscal first-quarter revenue of $2.418 billion, up 28% year-over-year, with CEO Matt Murphy citing exceptional AI-related bookings. The company guided second-quarter revenue to a midpoint of $2.7 billion, well above consensus estimates. Despite the strong performance, the stock trades at a price-to-earnings ratio of approximately 106.7, reflecting investor expectations for sustained growth driven by AI infrastructure spending.
However, risks remain. The Amazon chip talks are still preliminary, and Marvell's business is exposed to demand fluctuations, customer concentration, potential vertical integration by cloud providers, supply chain disruptions, and the challenge of securing design wins. If Amazon limits Trainium sales to internal use, or if optical component demand slows, the stock's high valuation leaves little room for disappointment.
Marvell's role in building the backbone for AI—designing custom chips, switches, and optical links—positions it as a key beneficiary of the industry's shift away from reliance on Nvidia (NVDA) processors, which are expensive and in tight supply. The broader data-center supply chain is evolving, and Marvell is well-placed to capture a share of that growth.
