On Wednesday, Citi maintained a Buy rating on Marvell Technology Group Ltd . (NASDAQ:MRVL) and increased its price target from $91.00 to $112.00. This revision reflects the company's robust performance, with the stock delivering an impressive 59.6% return year-to-date and trading near its 52-week high of $98.72.
According to InvestingPro data, analysts maintain a strong bullish consensus on MRVL, particularly regarding its custom compute AI chips, especially the Trainium2 for AWS.
Marvell recently announced a significant five-year strategic partnership with AWS. The collaboration was highlighted earlier in the week, and AWS's comments at the re-Invent event today further reinforced the potential for Marvell's Trainium (Trn2) chip. AWS pointed to a 30-40% better price/performance ratio, noting that Anthropic is building the largest machine learning training cluster with a fivefold increase using Ultra 64 Trn servers.
Moreover, AWS plans to roll out the next iteration, Trn3, by late 2025, which is sooner than the previously anticipated 2026. InvestingPro analysis indicates that while Marvell currently operates with moderate debt levels and maintains strong liquidity, its high EV/EBITDA multiple of 86.6x reflects significant growth expectations.
Citi's analyst cited these developments as reasons for lifting their above consensus CY24/25/26 EPS forecasts by 6%, 10%, and 24%, respectively. The new price target of $112 is based on approximately 35 times the revised 2025 EPS, an increase from the prior 32 times valuation, due to a higher AI sales mix. Additionally, the firm's bull case for Marvell has been updated to a target of $140.
The endorsement from Citi positions Marvell as a leading player in the custom ASIC compute market heading into 2025. The company's performance and strategic moves have evidently strengthened its market position and financial outlook, as reflected in the raised price target and sustained Buy rating.
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