Marvell Technology, Inc. (MRVL) faces formidable challenges and promising opportunities in the rapidly evolving tech industry. This article examines the financial health based on the Q3 and Q4 2024 earnings reports and offers technical analysis to identify long-term investment prospects. Observation reveals that the stock price has established a robust price floor and is exhibiting strength at a crucial pivot point, suggesting a potent upward trend in the market.
A Look at EarningsMarvell Technology experienced a notable decline in its financial performance in Q3 2024 compared to last year. The company’s net revenue was reported at $1.419 billion, which represents an 8% year-on-year decrease. However, this decline was mitigated because the revenue exceeded the midpoint of the company’s guidance by $19 million, as provided in August 2023. The quarterly revenue chart below presents a long-term positive trajectory, indicating promising future profitability for Marvell.The GAAP gross margin was 38.86%, with a significantly higher non-GAAP gross margin of 60.6%. The financial strain was further evidenced by the GAAP net loss of $(164.3) million, translating to $(0.19) per diluted share, as shown in the chart below. In contrast, the non-GAAP net income painted a different picture, standing at $354.1 million or $0.41 per diluted share.Marvell’s performance in Q3 showed a mixed bag of outcomes. While there was a sequential growth of 6% in revenue, the year-on-year decline indicates challenges in maintaining growth momentum. Matt Murphy, Marvell’s Chairman and CEO, highlighted the company’s success in the data center end market, which saw over 20% growth sequentially in Q3, with expectations of over 30% growth in Q4. This growth was primarily driven by increasing AI and cloud services demand, showcasing the company’s strategic diversification.The Q4 2024 net revenue was $1.427 billion, surpassing the mid-point of the Company’s guidance. GAAP net loss for the quarter was $(392.7) million, or $(0.45) per diluted share, while non-GAAP net income was $401.6 million, or $0.46 per diluted share, with cash flows from operations at $546.6 million. For fiscal 2024, net revenue was $5.508 billion, with a GAAP net loss of $(933.4) million, or $(1.08) per diluted share, and non-GAAP net income of $1.310 billion, or $1.51 per diluted share. Matt Murphy, Marvell’s Chairman and CEO, highlighted that AI significantly boosted the data center end market revenue, increasing 38% sequentially and 54% year-over-year. He emphasized Marvell’s strategic position in the AI infrastructure market and projected continued sequential growth in data center revenue for the first quarter of fiscal 2025, driven by initial shipments of cloud-optimized silicon programs for AI. Despite anticipated short-term soft demand in consumer, carrier infrastructure, and enterprise networking, Murphy expects a recovery in these markets in the second half of the fiscal year.
Exploring the Process of Bottom FormationThe technical analysis for Marvell shows a strongly bullish trend, as illustrated in the monthly chart below. Notably, the stock’s history reveals a triple bottom formation, with lows recorded at $3.84 in 2008, $6.09 in 2012, and $6.85 in 2016. This pattern has established a solid foundation for Marvell, triggering a significant upward movement. A critical moment in this upward trend occurred when the stock breached the $31.58 mark, highlighted by the blue arrow, recognized as a pivotal point in the market. Following this breakthrough, the stock price surged, reaching an all-time high of $92.87 in 2021. The beginning of this impressive rally can be traced back to the 2020 lows at $16.11. 
MRVL Monthly Chart (stockcharts.com)The 2020 drop was primarily due to the global economic downturn triggered by the COVID-19 pandemic, which led to widespread uncertainty and bearish sentiment in the tech sector. However, the company’s remarkable rally to record highs of $92.87 in 2021 was attributed to several key factors. Firstly, the increasing demand for data centers and cloud services, fueled by the shift to remote work and online education, significantly boosted Marvell’s networking and storage solutions business. Additionally, Marvell’s strategic acquisition of Inphi, a leader in high-speed data movement, broadened its market reach and product portfolio, positioning it well in the burgeoning 5G, cloud, and automotive markets. These strategic moves, coupled with a general rebound in the tech sector and investor optimism about future growth prospects in a post-pandemic world, contributed to the surge in Marvell’s stock price.After hitting the peak at $92.87, the stock underwent a downward correction, finding a solid base for support. This decline was halted at the significant 61.8% Fibonacci retracement mark, approximately $37.80, a Fibonacci level extending from the 2008 lows to the recent record highs. Subsequently, the stock established a strong foundation at this point and witnessed a rebound, concluding December 2023 above the 38.2% Fibonacci retracement level of $58.83. Notably, the decline towards the 61.8% retracement level also coincided with the blue support line at $33.59, and a robust recovery from here suggests that the stock might have already reached its bottom and is poised for an upward trajectory. Additionally, the RSI is returning from the 50 mark, further signaling a potential upward trend continuation.
Investor ConsiderationsThe weekly chart below further strengthens the above bullish outlook. The chart reveals a notable triple bottom formation at $35.08, $33.59, and $36.47, with a pivotal neckline near $46. This pattern has catalyzed a robust upward movement in price, reaching a critical juncture at the red trend line, around $67. The RSI is also turning from the 50 mark, which suggests strong support. A breach above $67 is poised to trigger a significant surge, propelling the stock towards and potentially beyond its historical peak of $92.87. 
MRVL Weekly Chart (stockcharts.com)The daily chart offers a more detailed perspective on this bullish trend, highlighting an inverted head and shoulders pattern with the head at $46.02 and shoulders at $52.13 and $50.30. This configuration suggests that the stock is poised for a strong bullish breakout. Given these patterns, investors may consider buying Marvell Technology at the current level, aiming to capitalize on the expected rally. 
MRVL Daily Chart (stockcharts.com)
Market RisksWhile there’s a strategic focus on growing sectors like AI and cloud, the overall softening demand in other markets and a forecast of flat revenue growth in Q1 2025 reflect potential risks in sustaining long-term growth. However, the robust cash flow suggests a solid underlying operational efficiency. The triple bottom pattern and subsequent rise to all-time highs in 2021 indicate strong market confidence, driven by increased demand in key sectors and strategic acquisitions. However, the stock’s correction post-peak and stabilization at the 61.8% Fibonacci retracement level reveal susceptibility to broader market trends and investor sentiment. The current price move above the 38.2% Fibonacci retracement level, coupled with a recovering RSI, indicates a potential extension of the upward movement. However, a price break below $37.81 will likely shift the trend to bearish.
Bottom Line In conclusion, Q3 and Q4 2024 earnings reflect Marvell’s robustness amidst challenges. Although there was a decline in net revenue compared to the previous year, the company surpassed its revenue forecasts. This success largely stems from significant accomplishments from data centers driven by the increasing demand for AI and cloud services. The solid operational cash flow and the expected improvements in gross margins for Q4 2024 are positive indicators for Marvel Technology. From a technical analysis perspective, Marvell’s stock exhibits a robust bullish trend. The stock’s bullish trend is evident through its historical triple bottom formation and notable recovery from the 2020 lows. Furthermore, the recent rebound from the 61.8% Fibonacci retracement level, coupled with the triple bottom formation on the weekly chart and the development of an inverted head and shoulders pattern on the daily chart, suggest a robust bullish momentum for Marvell Technology. Investors may consider buying Marvell Technology at current levels. A break above the $75 threshold could trigger a significant rally.More By This Author:Gold Emerges Strong Buy Despite Short Term Challenges
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