Marvell Is Growing Faster And Its Margin Guide Is Standing Still

Marvell Technology (MRVL) trades at $223.55, down 22.6% over the past three months, even after a 249.5% gain over the past twelve. Management raised its revenue outlook again. What it did not raise is the non-GAAP gross margin behind that revenue, a line management ties to its custom silicon ramp.

Marvell Nearly Doubles Sales And Guides The Same Margin Band

Management guided non-GAAP gross margin for fiscal Q3 2027 to a low end of 57.5% and a high end of 58.5%, expects the same range in fiscal Q4 2027, and its preliminary view is that fiscal 2028 sits in that band. too. Marvell posted $9.5 billion of revenue over the past twelve months, guides to roughly $12 billion in fiscal 2027 and roughly $18 billion in fiscal 2028, a year it now expects to grow about 50%, against the roughly 45% in its prior outlook. Off the trailing twelve months, revenue nearly doubles. What Marvell keeps on each dollar at the gross line steps down from 58.9% and stays there.

And It Is Adding That Revenue In Custom Silicon

Management ties the sequential gross-margin headwind in fiscal Q3 2027 to the accelerating ramp in its custom business. Data center was 79% of revenue in fiscal Q2 2027, and within it management expects custom, which includes its XPU and XPU attach products, to more than double in fiscal 2028 and accelerate again in fiscal 2029.

The rest keeps growing, too, in optical DSPs, switching, and broadband analog TIAs and drivers. Management points to product mix as what moves gross margin. So the faster Marvell grows, the more of its revenue comes from the part management blames for the margin pressure.

Marvell Is Still Getting More Profitable, Up To A Point

The mix shift has not stopped profits from rising. Non-GAAP operating margin was 36.6% in fiscal Q2 2027, 180 basis points better than a year earlier, and management expects it will likely enter its 38% to 40% long-term target range in fiscal Q4 2027 and reach the upper end through fiscal 2028. The further gain comes from operating expenses growing at roughly half the rate of revenue in fiscal 2028.

That leverage is real, and it ends at a number management has already named. Inside the target range, profit growth tracks revenue growth at a gross margin the guidance holds flat. The market pays 21.2 times trailing sales for that, the top decile of its own decade.

So What Are You Paying For At 21 Times Sales?

You are paying for volume. A gross margin in that band is a strong business, the growth is real, and the stock is still up 249.5% over the past twelve months, so some of this is in the price. The upside now has to come from selling more, not from keeping more of each sale.

Watch two things: whether fiscal Q3 2027 gross margin lands above the guided band, and whether the long-term model that management resets at its investor day in October moves the gross margin up. Until then, the honest question is whether a stock at about 68% of its 52-week high is a discount or a repricing, and there is a screen built for exactly that question.

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