One Wall Street Analyst Believes Marvell Technology Stock Has 24% Upside

Marvell Technologyfirms(NASDAQ resonance code: MRVL)'s shares have soared to new highs this year as investors expect strong artificial intelligence (AI) demand to boost the company's data center solutions business.

Earlier this week.KeyBancAnalysts at the company maintained a hold (buy) rating on the stock, but lowered their price target from $95 to $90, noting that product delays could have a negative impact on the company's growth this year. The new target price for the next 12 months or so still leaves nearly 24% of upside from where the stock was before.

Is Marvell stock worth buying?

Marvell's industry growth improved last quarter, driven by strong demand for artificial intelligence in the data center. Total revenue grew only 11TB3T year-over-year, but data center revenue grew a whopping 541TB3T year-over-year.

However, KeyBanc notes that Marvell'sAmazonThere may be some delays in upgrading to AWS, for which Marvell is a major supplier, and a leader in artificial intelligence chips.Nvidia), which is releasing a new server rack system, but to Marvell's detriment, INVISTA's GB200 rack does not require an optical connector.

However, Marvell continues to see AI adoption as a key growth driver in the near term. The company has made investments over the past few years to prepare for the AI wave. Management is guiding for low-single-digit growth in data center revenue in the first quarter over the previous quarter, but it may need to exceed that to meet investors' high expectations.

The company's stock has an expensive forward price-to-earnings ratio of 50, which is why analysts have lowered their price tags in light of possible product delays. According to Wall Street consensus estimates, the company will earn $3.33 per share over the next two years.

Given the stock's high price, Marvell will need to exceed Wall Street's expectations in order to deliver a strong report.

Should you invest $1,000 in Marvell Technology now?

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John Mackey, former chief executive officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard owns shares of Nvidia. The Motley Fool recommends shares of Amazon and Nvidia. The Motley Fool recommends Marvell Technology. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.

A Wall Street Analyst Says Marvell Technology Stock Has 24% Upside was originally published by The Motley Fool.