Chip designer Marvell Technology delivered a fiscal 2027 second-quarter earnings beat on Thursday, while simultaneously raising its full-year revenue guidance for both fiscal 2027 and fiscal 2028, signaling sustained strength in AI-driven demand.

Quarterly net revenue reached a record $27.39 billion, up 37% year-over-year and topping both the company's own midpoint guidance of $27.0 billion and the consensus estimate of $27.2 billion. Data center revenue surged 46% to $21.715 billion, lifting its share of total revenue to 79% from 74% in the year-ago period and 76% in the prior quarter. Management now sees fiscal 2027 revenue of roughly $120 billion, up from the prior outlook of $115 billion and implying year-over-year growth of approximately 45%. For fiscal 2028, the company lifted its revenue view from $165 billion to around $180 billion, implying growth of roughly 50%.

Despite the beat-and-raise, shares fell 1.5% in regular trading and dropped another 6.5% in after-hours action to $225.83, as investor expectations had already been significantly elevated heading into the print.

Quarterly Financial Breakdown

GAAP net income came in at $308 million, or $0.33 per diluted share, compared to $194.8 million, or $0.22 per share, in the same period last year. On an adjusted basis, non-GAAP net income reached $865.9 million, or $0.94 per diluted share, edging past the Street's $0.93 projection. Operating cash flow for the quarter amounted to $605.5 million.

The data center segment posted revenue of $21.715 billion, up 46% year-over-year and 18% sequentially, while the combined enterprise networking, carrier infrastructure, and other businesses generated $567.8 million, up 10% year-over-year but down 3% sequentially. Chairman and CEO Matt Murphy noted on the earnings call that demand intensity in the data center end market continued to outpace internal expectations throughout the quarter.

Guidance Raised Across All Time Horizons

Citing robust demand for compute interconnect and custom silicon, management boosted financial expectations across multiple periods. For fiscal 2027, total revenue is now expected to be approximately $120 billion, an increase of about $500 million from the prior outlook, with data center growth forecast accelerating to roughly 60% from the prior ~50% view, versus the consensus of $115.6 billion. The fiscal 2028 outlook was lifted to approximately $180 billion, up $15 billion from the previous figure, representing growth of about 50%, with data center revenue expected to grow more than 60% year-over-year, compared to the market's $169.1 billion expectation.

For the fiscal 2027 third quarter, management guided to net revenue of $31.50 billion, plus or minus 5%, topping the $30.4 billion consensus. Non-GAAP diluted EPS is expected at approximately $1.10, plus or minus $0.05, versus the $1.08 Street estimate. At the midpoint, third-quarter revenue growth would exceed 50% year-over-year, with data center revenue expected to grow over 20% sequentially and around 75% annually.

Interconnect and Custom ASIC Momentum

During the call, Murphy highlighted that AI-related orders remain solid across three core growth pillars: connectivity, switching, and custom silicon. In optical interconnect, shipments of 800G DSPs continue at elevated levels, while 1.6T products are in the early stages of a production ramp, with acceleration expected through fiscal 2028. The custom compute business, encompassing XPUs and associated chips, is projected to see a meaningful volume increase in the second half of fiscal 2027, with fiscal 2028 revenue expected to more than double year-over-year and continued acceleration into fiscal 2029.

Marvell counts Amazon and Google among its primary custom compute customers. Last week, the company issued a warrant to Google allowing the purchase of nearly 59 million shares of common stock at $206.58 per share. Regarding long-term contracted revenue, management noted that signed deals are already incorporated into the fiscal 2028 outlook, with additional upside potential remaining for fiscal 2029 and beyond.

On the profitability front, management expects fiscal 2028 gross margins to remain within a range similar to the second half of this year. Operating margin is targeted at 38% to 40%, with entry into that band expected by year-end and a gradual move toward the upper end through fiscal 2028.

Market Reaction and Upcoming Milestones

Despite the comprehensive beat and upwardly revised long-term guidance, the stock's nearly 200% year-to-date rally prompted some profit-taking following the earnings release, sending the after-hours price to $225.83. Marvell is scheduled to host an Investor Day on October 6, where management is expected to unveil multi-year revenue targets for fiscal 2029 and provide an updated long-term financial model and strategic framework.