Marvell Technology stock price has come under pressure in the past few months as concerns about its growth and valuation have remained. After peaking at $127.40 in January, it crashed by 62% to a low of $47.29. This crash has led to a $53 billion wipeout as the market cap dropped from $108 billion to $55 billion.
Why the Marvell stock retreated
Marvell Technology is a top technology company that designs and builds semiconductor products like integrated circuits and system-on-a-chip architecture. Its products are used in data centers, enterprise networking solutions, and carrier infrastructure.
The company has become a major supplier to data centers in the US and other countries. Most importantly, it is known for making custom chips for companies like Microsoft, Amazon, and Google.
Marvell’s business has seen higher demand as these clients change their business model. Instead of buying chips from companies like Intel, Amazon, Microsoft, and Google are building custom chips to meet their unique demands.
Apple is one company that has executed this approach well in the past few years. It abandoned Intel chips to focus on M1, M2, and M3 chips that are way much better than those made by Intel.
Marvell’s business has seen higher demand in the past few years, which explains why its annual revenue has jumped from $2.9 billion in 2021 to $5.76 billion in the last financial year.
Read more: Marvell stock is overvalued: will MRVL rise or fall after earnings?
The MRVL stock price has crashed in the past few months as concerns that the AI bubble was bursting rose. It also dropped because of export control measures that are expected to hit American companies with billions of dollars. NVIDIA believes that its controls will hit its Q2 revenue by $8 billion.
Marvell Technology stock price crash also mirrored that of other companies like NVIDIA, AMD, and Intel.
MRVL earnings ahead
The next key catalyst for the MRVL stock price will come out on Thursday when the company publishes its financial results.
Analysts expect that Marvell Technology’s earnings will be strong. Its revenue is expected to come in at $1.88 billion, a whopping 61.8% increase from the same period last year.
Its forward guidance for the second quarter will be $1.98 billion, a 55% annualized increase, while its full-year guidance will be $8.19 billion, a 42% annual increase.
Marvell Technology is also expected to turn a profit this year. Its earnings per share estimate is 61 cents, a big increase from last quarter’s $0.24.
Chances are that Marvell’s earnings will come out stronger than expected, as it has done in the past few quarters.
The most recent results showed that Marvell’s revenue rose by 27% in Q4, helped by its data center, one rose by 78% to $1.36 billion.
MRVL stock price analysis
The daily chart shows that the MRVL share price has crashed from the year-to-date high of $127.30 to the current $64.60. It formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.
Most recently, the stock has formed a rising wedge pattern, which is comprised of two ascending and converging trendlines. A wedge is one of the most bearish patterns in technical analysis.
Therefore, the stock will likely drop after earnings. If this happens, the next point to watch will be the year-to-date low of $47.50. That would signal a 26% plunge from the current level.
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