Author: Rita
While the market debates AI ASIC competition and optical communication market share, JPMorgan has already raised its earnings per share (EPS) estimate for Marvell Technology Group Ltd. for CY28 to $11, which is 14% higher than the market consensus of $9.64. On August 24, JPMorgan released a preview report for Marvell's fiscal 2027 second quarter (July quarter), reiterating its Overweight rating, noting that the company's data center growth trajectory has only strengthened over the past 90 days.
Google's custom chip partnership has been secured, AWS Trainium 3 is ramping up, and Microsoft's Maia XPU order book is robust—all three major cloud providers are now on Marvell's client list. JPMorgan believes the market has not yet fully priced in the company's comprehensive capabilities, spanning from optical DSP to XPU ASIC and switch chips.
July Quarter Results Expected to Meet or Slightly Exceed Expectations
Marvell's fiscal 2027 second quarter (July quarter) results are expected to meet or slightly exceed market expectations. Demand for optical DSPs remains strong, with both 1.6T and 800G generations ramping simultaneously. The Teralynx 10 switch chip continues to gain customer traction, and the custom chip business is beginning to benefit from the early ramp of AWS's 3nm Trainium 3 project.
JPMorgan expects Trainium 3 shipments to accelerate significantly in the second half of the year, while Trainium 2 phases out concurrently, creating a generational transition. The combined effect of both product generations is expected to significantly boost Marvell's data center revenue. The growth trends for optical DSPs and switch chips are also seen as solid.
October Quarter Revenue Guidance Expected to Beat Consensus
The market consensus for fiscal 2027 third quarter (October quarter) revenue is $3.028 billion. JPMorgan expects Marvell's official guidance to be around $3.1 billion, implying a quarter-on-quarter total revenue growth of 13% to 14%. Growth in the data center segment is anticipated to be even faster, projected at a 16% to 18% sequential increase.
This growth is driven by four factors: a more substantial ramp in Trainium 3 shipments, sustained strong demand for optical DSPs and switch chips, expansion of XPU-related opportunities, and the planned progression of the Maia 3nm project. The order book for the Maia 3nm project in calendar year 2027 is already quite firm, and design work for the next-generation Maia 2nm has commenced.
Data Center Long-Term Outlook Likely to Be Revised Upward
The market's focus is on the calendar year 2027 data center revenue outlook. The company's current expectation is year-over-year growth of 55%, but JPMorgan views this figure as conservative. The combined effect of six factors—continued ramp of optical DSPs, customer expansion for Teralynx 10, ramp of storage and CXL controllers, scale of Trainium 3, visibility for Maia, and broadening pipeline of XPU companion chips—suggests that the revenue and EPS outlook for calendar years 2026 to 2028 should be higher than the current consensus.
The public confirmation of the Google partnership further validates Marvell's strategic value within the custom chip ecosystem of cloud providers. JPMorgan emphasizes that this is not just a win for a single XPU project but represents the company's elevated role as an independent chip partner for hyperscale customers.
Recommendation and Risk Factors
JPMorgan reiterates its Overweight rating with a $240 price target. Achieving an EPS of $11 in calendar year 2028 implies a 14% premium to the current market consensus of $9.64, and this path is becoming increasingly clear.
Key risks center on the following: a potential marginal slowdown in AI capital expenditure could directly impact the data center business; changes in ASIC competitive dynamics could affect market share; fluctuations in optical communication market share require ongoing monitoring; and high customer concentration remains a structural topic of discussion. JPMorgan believes these risk factors have been extensively discussed by the market, and the current valuation already incorporates a significant degree of cautious expectation, suggesting greater upside potential than downside risk.
Disclaimer
This article is a compilation and interpretation by ChaoXiang Research of a third-party brokerage research report (JPMorgan, August 24, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein are the views of the brokerage's analysts, representing the stance of their institution only. They do not represent the views of ChaoXiang Research nor constitute any investment advice.
The market carries risks, and investment decisions should be made independently. This article should not be used as a basis for buying or selling any securities.
