Shares of Marvell Technology (MRVL) have made a solid rally so far this year by capitalizing on AI hype. However, it appears as if the semiconductor manufacturer may have overestimated its ability to take advantage of the technology. Or, at the very least, its timeline to seeing profits.

Marvell reported its third-quarter earnings alongside a fourth-quarter guidance that left analysts and investors alike underwhelmed. That being said, many analysts are advising investors to be patient. AI dividends will come in the long run.

The company reported sales of $1.42 billion along with earnings of 41 cents per share, resulting in an 8% decline and 28% decline respectively. These figures narrowly outperformed the consensus of $1.4 billion and 40 cents.

This was coupled with cautious guidance for the quarter ahead. Marvell is forecasting sales to remain flat quarter over quarter with another $1.42 billion performance. Earnings may improve marginally to 46 cents. That being said, both of these figures are below the consensus of $1.46 billion and 49 cents.

Marvell has struggled with lower demand for its data center storage this year, but executives with the company believe the worst is behind them. In fact, Raymond James analyst Srini Pajjuri is expecting to see double-digit growth in revenue in the coming years. 

The one bit of positive news Marvell issued is in regards to AI revenue in the final quarter of the year. It initially forecasted a $200 million run rate heading into the new year, but said it will deliver a figure well above what was initially projected.

But, nobody is going to forget the bold claims Marvell made earlier this year, forecasting AI-related revenue of around $400 million, with $800 million in the following year. Anything less will be a disappointment.

Where does all this leave investors, though? Is it worth being patient and waiting to reap the benefits of AI advancement? Or, is this your sign to get out of MRVL

We’ve taken a look through the VectorVest stock forecasting software and found 3 things you need to see to help you make your next move with confidence and clarity.

MRVL Has Very Poor Upside Potential, But Good Safety and Fair Timing

The VectorVest system simplifies your trading strategy by giving you all the insights you need in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). 

Each of these sits on a scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. But it gets even easier. 

You’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. The system eliminates human error, guesswork, and emotion from your decision-making. As for MRVL, here’s what you need to see:

  • Very Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates and risk. MRVL has a very poor RV rating of 0.45 right now, and is overvalued - its current value is just $18.90.
  • Good Safety: The RS rating is an indicator of risk. It’s derived through a detailed analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, and price volatility. MRVL has a good RS rating of 1.18.
  • Fair Timing: MRVL has been up and down recently, and the fair RT rating of 1.01 reflects its uncertain price trend right now. The rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 0.96 is a bit below the average, but considered fair nonetheless. The stock is currently considered a HOLD in the VectorVest system. You’ll want to wait for a more meaningful price trend to form one way or the other before buying/selling this stock. 

So, get a free stock analysis today to learn more about how the system works and stay up to date with MRVL!

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. MRVL is down more than 6% after delivering downtrodden earnings and lackluster guidance for the remainder of the year. While the stock has very poor upside potential, it does have good safety and fair timing.

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