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MRVL
Earnings call · Jul 2026 (Q2 FY27)

Marvell Technology Q2 FY27 earnings call MRVL

Aug 27, 2026 Source

Executive summary

Marvell Technology, Inc. Q2 FY27 — AI-Driven Data Center Growth Accelerates, Outlook Raised Significantly

Marvell delivered strong Q2 FY27 results, driven by accelerating and broadening demand in its Data Center business, particularly from AI. The company significantly raised its revenue outlook for both FY27 and FY28, with growth rates accelerating despite a larger revenue base. Strategic investments in custom silicon and scale-up optics are positioning Marvell for substantial long-term opportunities, with a new CFO focused on efficient scaling and operating margin expansion.

Highlights

5

  • Record revenue of $2.739 billion, reflecting 13% sequential and 37% year-over-year growth, exceeding midpoint of guidance.

  • Non-GAAP EPS of $0.94, up 40% year-over-year, also exceeded midpoint of guidance.

  • Fiscal 2027 revenue outlook raised by $500 million to approximately $12 billion, representing 45% year-over-year growth.

  • Fiscal 2028 revenue outlook raised by $1.5 billion to approximately $18 billion, representing 50% year-over-year growth.

  • Data Center revenue grew 46% year-over-year to $2.17 billion in Q2 FY27, with FY27 growth outlook increased to 60% and FY28 to over 60%.

Concerns

3

  • Communications and Other segment revenue declined 3% sequentially to $568 million in Q2 FY27.

  • Q3 FY27 Communications and Other revenue expected to decline in the low to mid-teens percentage range sequentially and year-over-year.

  • Non-GAAP gross margin guidance for Q3 FY27 is 57.5%-58.5%, a sequential headwind due to accelerated custom business mix.

Guidance & targets

CategoryTargetConfidence
Total Company Revenue
$3.15 billion +/- 5%
high materiality
High
Total Company Revenue
approximately $12 billion
high materiality
High
Total Company Revenue
approximately $18 billion
high materiality
High
Data Center Revenue Growth
approximately 60% year-over-year
high materiality
High
Data Center Revenue Growth
more than 60% year-over-year
high materiality
High
Custom Business Growth
more than double year-over-year
high materiality
High
Communications and Other Revenue Growth
approach 10% target
medium materiality
Medium
Communications and Other Revenue
decline in the low to mid-teens percentage range
medium materiality
High
Data Center Revenue Growth
more than 20% sequentially and roughly 75% year-over-year
high materiality
High
GAAP Gross Margin
between 52.9% and 53.9%
medium materiality
High
Non-GAAP Gross Margin
between 57.5% and 58.5%
medium materiality
High
Non-GAAP Gross Margin
maintain in this range
medium materiality
High
GAAP Operating Expense
approximately $1.015 billion
medium materiality
High
Non-GAAP Operating Expense
approximately $655 million
medium materiality
High
GAAP Other Income and Expense
expense of approximately $86 million
low materiality
High
Non-GAAP Other Income and Expense
expense of approximately $36 million
low materiality
High
Non-GAAP Tax Rate
11%
low materiality
High
Non-GAAP Tax Rate
approximately 13%
low materiality
High
Basic Weighted Average Shares Outstanding
approximately $900 million
low materiality
High
Diluted Weighted Average Shares Outstanding
approximately $921 million
low materiality
High
GAAP Earnings Per Diluted Share
$0.48 to $0.58
high materiality
High
Non-GAAP Earnings Per Diluted Share
$1.05 to $1.15
high materiality
High
Non-GAAP Operating Expenses
approximately $2.55 billion
medium materiality
High
Non-GAAP Operating Margin
enter our 38% to 40% long-term target range
high materiality
High
Non-GAAP Operating Expenses Growth
grow at roughly half the rate of revenue growth in percentage terms
medium materiality
High
Non-GAAP Operating Margin
achieve the upper end of our target non-GAAP operating model of 38% to 40%
high materiality
High
Capacity Prepayments to Suppliers
approximately $1 billion
medium materiality
High
Gross Margins
similar range, same range as we're exiting this year
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Data Center
Delivered record revenue, with both sequential and year-over-year growth accelerating from Q1 FY27. Growth is broad-based across interconnect, switching, and custom, driven by AI demand.
Contribution to total revenue: 79%
$2.17 billion46%18%—
Communications and Other
Revenue declined sequentially but grew year-over-year. Expected to remain somewhat lumpy on a quarterly basis, with a decline in Q3 FY27 followed by a solid sequential recovery in Q4 FY27.
$568 million10%-3%—

Deals & partnerships

Key hyperscaler (Google) Expanded commercial agreement and associated warrant for custom silicon programs $120 billion cumulative revenue 6 years

The warrant agreement encompasses custom programs already in execution, new design wins, and future potential programs. It covers a broad range of custom silicon, including AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory compute. The structure reflects the scale and long-term potential of the relationship and aligns common interests.

Risks & headwinds

Quarter-to-quarter lumpiness in Communications and Other segment Q3 FY27

Q3 FY27 revenue expected to decline in the low to mid-teens percentage range sequentially and year-over-year.

Mitigation:Expected solid sequential recovery in Q4 FY27; FY27 growth still expected to approach 10% target.

Sequential headwind to gross margin from custom business mix Q3 FY27

Non-GAAP gross margin guidance for Q3 FY27 is 57.5%-58.5%, down from 58.9% in Q2 FY27.

Mitigation:Gross margins expected to maintain in this range in Q4 FY27 and FY28. Operating margin expansion expected to continue, reaching upper end of 38%-40% target in FY28.

Pervasive industry-wide supply constraints Ongoing

Not quantified, but mentioned as a challenge.

Mitigation:Operations team doing an outstanding job securing additional supply; aggressively securing additional capacity to support growth, including $1 billion in capacity prepayments in FY27.

What to watch in Q3 FY27

Data Center Revenue Growth

Q3 FY27
Current Q2 FY27: +46% YoY
Target Q3 FY27: >20% sequential, ~75% YoY

Why it matters

Data Center is the primary growth driver, and its continued acceleration is key to achieving the significantly raised FY27 and FY28 revenue outlooks.

Now looking ahead to the third fiscal quarter, we expect this acceleration to continue with data center revenue forecasted to grow more than 20% sequentially and roughly 75% year-over-year.

Q&A highlights

What specific XPU attach products are contributing to the Google warrant revenue, and what is the percentage contribution between inference accelerators and attach products?

The Google warrant agreement covers a broad range of products including inference accelerators, storage controllers, NICs, memory interface controllers, and near-memory compute. Marvell's XPU attach category, defined years ago, has exceeded projections and continues to grow significantly. The opportunity is massive and game-changing over the next 6-6.5 years, with no specific percentage breakdown provided but emphasizing the broad-based nature.

“it's a very broad-based. It's a number of products and product lines, which is very exciting. It includes inference accelerators as you mentioned, also storage controllers, nicks, memory interface controllers, near-memory compute, a whole bunch of different products and you're right, we did define the -- what we call the XPU attach category a couple of years back, and actually we gave quite a detailed view of that in our June 2025 custom silicon event.”

asked by Thomas O'Malley · answered by Matthew Murphy

2 min read 5 chapters

Detailed narrative

Accelerating Data Center Momentum

Marvell's Data Center end market continues to be the primary growth engine, delivering record Q2 FY27 revenue of $2.17 billion, up 18% sequentially and 46% year-over-year. This acceleration is expected to continue, with Q3 FY27 Data Center revenue forecasted to grow over 20% sequentially and approximately 75% year-over-year. The company has raised its FY27 Data Center growth outlook to 60% and expects over 60% growth in FY28, driven by broad-based AI demand across interconnect, switching, and custom solutions.

Strategic Expansion in Custom Silicon

The custom business is experiencing significant acceleration, with expectations to more than double year-over-year in FY28 and further accelerate in FY29. This growth is fueled by both XPU and XPU-attached products, including AI inference accelerators, storage controllers, NICs, memory interface controllers, and near-memory compute. A recently expanded commercial agreement and warrant with a key hyperscaler, one of the largest adopters of custom silicon, validates Marvell's leadership and provides confidence in substantial long-term growth beyond FY28.

Leadership in Scale-Up Optics and Switching

Marvell is aggressively investing in and seeing strong momentum in next-generation scale-up optical interconnect and switching technologies. The company is uniquely positioned to address the transition from copper to optics in AI clusters, supporting NPO and CPO packaging options with advanced silicon photonics and various modulator technologies. Scale-up optics revenue outlook for FY28 has increased meaningfully, with Marvell aiming to be a leading enabler of NPO in AI infrastructure. The company also supports all three purpose-built scale-up protocols (UAL, ESUN, NVLink Fusion) through its internally developed switches and NVIDIA partnership.

CXL and Memory Expansion Opportunities

Marvell's organic investment in CXL technology is proving to be a significant success, particularly for memory expansion in AI inferencing. The technology is being deployed at multiple hyperscalers in high volumes, driven by the demand for inferencing and the scarcity of memory. The company has secured additional design wins in this area, indicating a massive and growing opportunity that will be detailed further at the upcoming Investor Day.

Financial Discipline and Operating Leverage

New CFO Dan Durn emphasized a focus on efficient scaling, expanding operating margins, growing cash flow, and driving stockholder returns. Marvell expects significant operating leverage, with non-GAAP operating margin likely to enter its 38%-40% long-term target range in Q4 FY27 and achieve the upper end of this range in FY28. Non-GAAP operating expenses are projected to grow at roughly half the rate of revenue growth in FY28, reflecting continued investment against an expanding opportunity set.

AI-generated summary of the company's earnings call. Not investment advice.