Marvell Technology (NASDAQ: MRVL) tanked more than 10% this morning following reports it could lose Microsoft (NASDAQ: MSFT) as an artificial intelligence (AI) customer.
According to “The Information”, the hyperscaler is considering shifting from MRVL to AVGO for custom AI chips – a move that could reshape competitive dynamics in custom silicon.
Investors are bailing on Marvell stock primarily because losing MSFT wouldn’t just mean loss of revenue, but a major blow to the company’s overall credibility as a custom chipmaker.
Does it warrant selling Marvell stock?
Despite the aforementioned report, JPMorgan analysts continue to recommend owning MRVL shares heading into 2026.
Marvell remains on track to begin deliveries of Maia 3nm XPU to the hyperscaler late next year – with a meaningful ramp in deliveries to Microsoft expected in 2027.
Plus, the Nasdaq-listed firm has secured purchase orders from Amazon for its Trainium 3 XPU for all of 2026 as well.
This means Marvell is unlikely to lose its credibility with hyperscalers, and Microsoft’s potential shift to AVGO wouldn’t materially influence its revenue – at least not in the near-term, JPM argued.
On Monday, the investment firm maintained its $130 price target on Marvell Technology, signalling potential upside of about 45% from here.
MRVL shares aren’t particularly expensive to own
JPMorgan analysts remain largely constructive that MRVL will deliver on its promise of more than 20% growth (annually) in its custom AI chips business.
Beyond fundamentals, technicals point to a recovery in Marvell shares as well.
The semiconductor behemoth, despite today’s pullback, remains handily above its key moving averages (50-day, 100-day, 200-day) – indicating the broader uptrend remains intact.
Moreover, the Wilmington-headquartered firm is currently going for less than 15x sales – sharply below 34x for the leading AI stocks like Nvidia (NVDA).
In short, Marvell Technology remains relatively inexpensive to own as an AI play heading into the new year, with the $3.25 billion Celestial AI acquisition expected to further boost topline growth in 2026.
How Wall Street recommends playing Marvell Technology
All in all, the headline that MSFT is considering switching from Marvell to Broadcom for custom chips rattled investors on Dec. 8 – but JPM analysts believe the near-term impact on MRVL may be limited.
The company’s confirmed roadmap with Microsoft’s Maia 3nm XPU, alongside secured Amazon Trainium 3 orders, reinforces its credibility with hyperscalers and ensures revenue visibility through 2026.
Technically, MRVL stock remains above its major moving averages, indicating resilience despite volatility – and fundamentally, they trade at a deep discount to peers like Nvidia, offering investors exposure to AI growth at a more attractive valuation.
Other Wall Street firms agree with JPMorgan’s constructive view on Marvell shares as well.
The consensus rating on the chip stock remains at “overweight” with the mean target of $118 signalling more than 30% upside from here.
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