To The Moon

Marvell Earnings Preview: Anxious Eyes on AI ASIC Growth

This week, the semiconductor spotlight extends beyond AI GPU leader  $NVIDIA(NVDA)$   to include AI ASIC giant $Marvell Technology(MRVL)$   , which is scheduled to report its fiscal Q2 2026 results after the market close on August 28. Investor focus will be squarely on the company's progress in scaling its custom chip (ASIC) business and gaining clarity on the order pipeline for its next-generation Trainium 4 AI accelerators.

Core Financial Indicators

~Wall Street's consensus for Q2 revenue stands at $2.01 billion, representing a significant 58% year-over-year increase and a 1% sequential gain, slightly above the company's prior guidance of $2.0 billion.

~On the profitability front, the Q2 GAAP gross margin is anticipated to be 51%, marking a 4.8 percentage point improvement year-over-year and a 0.7 percentage point sequential increase. The Non-GAAP gross margin is expected to land at 60%, a 1.9 percentage point decrease from the year-ago quarter but a slight 0.2 percentage point improvement from the prior quarter.

~At the bottom line, Marvell has guided for a Q2 GAAP net income of $180 million, a notable turnaround from a loss in the same quarter last year. The Non-GAAP net income is projected to reach $590 million, which would represent a 120% year-over-year surge and an 8% sequential increase.

Three Things to Watch

What is the status of AWS's Trainium 3 and 4 orders?

Marvell is currently the exclusive supplier for $Amazon (AMZN.US)$ 's custom Trainium 2 AI training chip and has secured a portion of the next-generation Trainium 3, with production expected in 2026 after locking in 3nm wafer and advanced packaging capacity. Management has previously guided for continued growth in ASIC-related revenue from AWS into fiscal 2027 and beyond.

However, recent market chatter suggests that competitor $Astera Labs (ALAB.US)$ , in partnership with Taiwan's Alchip Technologies, may have captured the Trainium 4 business from Marvell. This speculation has been fueled by Astera Labs' official announcement of its collaboration with Alchip. Management will need to provide a clear statement on the Trainium 4 situation, as it is critical to the revenue visibility of Marvell's data center segment for fiscal 2028.

Will the full-year AI revenue guidance be raised?

In its Q4 FY2025 report, Marvell provided guidance for its full-year 2025 AI revenue to be "well over" $2.5 billion. This forecast was not updated in the Q1 FY2026 report, leaving the market uncertain about the precise definition of "well over." Investors will be looking for management to provide a more specific range to clear up this ambiguity.

When will AI ASICs account for more than 50% of data center revenue?

Last quarter, Marvell's AI-related revenue surpassed 50% of its total data center sales. However, this figure includes both the highly watched custom AI ASICs and AI-related electro-optics products. Currently, electro-optics account for approximately 75% of that AI revenue, and the market is eager to see a faster ramp-up in the AI ASIC contribution.

During the last earnings call, management appeared to downplay the significance of this internal mix, suggesting that analysts should focus on modeling when AI will contribute to 50% of the company's total revenue—an inflection point they claim is approaching. This attempt to blur the lines between custom silicon and electro-optics revenue has drawn some criticism from the investment community.

Option Market Signals

Marvell is slated to report after the close on Aug 28. The options tape signals an earnings event premium with a mild bullish skew: the Put/Call ratio is 0.62, spot has been trending higher, and IV at 67.10% sits well above HV at 48.35%. With IV Rank 39 and IV Percentile 75, today's IV is in the upper-middle of its 1-yr distribution rather than near extremes—implying a moderate-to-elevated move is priced, not an explosive one. Bottom line: constructively bullish but not euphoric; direction remains uncertain.

Summary

Marvell's stock has significantly underperformed the $PHLX Semiconductor Index (.SOX.US)$ this year, largely due to a lack of clarity surrounding the commercialization and future prospects of its core ASIC business. The upcoming earnings call presents a critical opportunity for management to restore investor confidence by demonstrating positive momentum in its custom chip segment and alleviating concerns about future growth.

~Potential Positive Catalysts: Clear AI Revenue Target.

~Risks to Monitor: Data Center Slowdown.

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