Marvell Technology: A Tale of Conflicting Market Signals

Marvell Technology finds itself at a curious crossroads. On one hand, the semiconductor specialist received a significant credit rating upgrade from Moody’s Investors Service, which cited a strengthened financial profile driven by artificial intelligence demand. On the other, its shares faced selling pressure, declining 2.8% in a single Wednesday session amid persistent industry rumors. This divergence presents investors with a complex picture to decipher.

Strategic Shift and Financial Fortitude

The upgrade from Moody’s serves as a powerful vote of confidence in Marvell’s strategic direction. The agency raised the company’s senior unsecured rating from Baa3 to Baa2, assigning a stable outlook. Central to this decision is a profound transformation in Marvell’s business mix. Moody’s anticipates that data center revenue will constitute approximately 75% of total sales by fiscal 2026, a dramatic increase from just 35% five years prior. The firm projects Marvell will achieve revenues around the $10 billion mark by fiscal 2027.

Financial metrics show marked improvement. The debt-to-EBITDA ratio has fallen sharply, declining from over 3.0 at the close of fiscal 2025 to 1.8 by the third quarter of fiscal 2026. Moody’s forecasts this leverage metric will drop further, below 1.5.

Leadership Counters Rumors, Investors Diverge

Countering the positive rating action is a cloud of market speculation. Chief Executive Officer Matt Murphy has moved to dismiss rumors that Marvell lost significant business with major cloud clients such as Amazon and Microsoft. These whispers have contributed to the stock’s recent weakness, with shares down 8.6% over the monthly period.

Should investors sell immediately? Or is it worth buying Marvell Technology?

Institutional investor activity reflects this uncertainty. While asset manager Janus Henderson exited its position, citing limited visibility in the data center segment, other firms have been aggressive buyers. Salem Investment Counselors increased its stake by 167%, and Thrivent Financial boosted its holdings by 55.5%.

A Focused Future Through M&A

The company’s strategic overhaul is being executed through decisive portfolio moves. To sharpen its focus on data center infrastructure, Marvell divested its automotive Ethernet business for $2.5 billion. Concurrently, it announced the acquisition of Celestial AI for an initial $3.25 billion, with the total deal value potentially reaching up to $5.5 billion. This pivot is aimed at dominating the markets for optical interconnect technology and custom computing solutions for data centers.

Valuation metrics present another layer to the analysis. Based on current estimates, the stock trades at a price-to-earnings multiple of roughly 23.5. Some market observers consider this an undervaluation, particularly in light of the 37% year-over-year revenue growth posted in the third quarter. Analysts at J.P. Morgan have named Marvell their top semiconductor pick for 2026, highlighting the company’s leading position in custom ASIC and electro-optics solutions.

Technically, the equity recently tested support levels near its 200-day moving average. Whether the dual catalysts of a credit upgrade and executive clarification can establish a durable price floor will likely become apparent in the coming trading sessions.