Marvell stock price plummeted by over 18% on Friday after the semiconductor giant published its earnings report. MRVL plunged to a low of $62.87, its lowest level since June 4, and 26% from its highest point this month. So, is it safe to buy the MRVL stock dip or wait for it to plunge further?
Marvell stock plunged after earnings
Marvell Technology’s stock price plummeted even after the company published strong financial results. Its revenue surged by 58% in the second quarter to a record $2 billion.
This revenue growth was driven primarily by the tailwinds in the artificial intelligence (AI) industry and the recovery of it enterprise networking and carrier infrastructure businesses.
AI data center revenue jumped by 70% to $1.4 billion, a trend that may continue as it continues to reach large deals. Its enterprise and carrier revenye rose by 43%, a strong improvement considering that it has been in a slowdown in the past few quarters.
Marvell’s revenue growth was accompanied by its margin expansion. Gross margin rose to 50.4% from the previous 50.3%, while the operating margin rose to 14.5%. This helped to push its net profit up by 120% to $585 million. The CEO said:
“Marvell’s growth is being fueled by strong AI demand for our custom silicon and electro-optics products, as well as a significant increase in the pace of recovery in our enterprise networking and carrier infrastructure end markets.”
The main reason why the Marvell stock price crashed is that the managment’s forward guidance was weaker than expected. Its guidance was that its revenue for the third quarter will be $2.06 billion, a 36% increase from the same period last year.
While a 36% annual growth is a good one, it was lower than what analysts were expecting. Historically, Marvell tends to be highly conservative, meaning that its real numbers will likely be better than estimates.
Marvell stock price also plunged after Nvidia, a top player in the chip industry, warned that its business was slowing. Also, there is a fear that some Chinese companies will disrupt the semiconductor industry.
MRVL stock price technical analysis
The daily timeframe chart shows that the MRVL stock price has plunged from its highest point in January, when its market cap overtook that of Intel.
It plunged from a high of $127.30 in January to a low of $47.50 in April. Most recently, the stock formed an ascending channel, which was part of its bearish flag pattern. It has moved below the lower side of this pattern.
Marvell stock price has moved below the 50-day and 100-day Exponential Moving Averages (EMA). It has moved to the strong, pivot, reverse point of the Murrey Math Lines tool.
Therefore, the most likely scenario is where the Marvell stock price continues plunging, potentially to the year-to-date low of $47.50. It will then bounce back later this year.
Read more: JPM says ignore earnings noise and buy Marvell stock like there’s no tomorrow
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