Babyfolio
Software Engineer, AI Infrastructure Investor
Marvell looks too expensive at 17x price to sales when peers in its space trade around 10x. @DGretta_Author argues its revenue relative to its market cap leaves the stock further to drop. x.comÂ
Marvell's risk/reward is no longer favorable after the stock ran three to four times from the $70s in March, when it was the most obviously undervalued chip stock. Jensen Huang's call for a $1T company is partly driven by his dislike of Broadcom's Hock Tan, and the Celestial AI angle is overhyped relative to the value it adds. A bounce is likely from here, but there is no case for adding exposure at the current price. x.com x.com x.comÂ
Marvell looks interesting at less than 30x calendar-2027 EPS against expected 60-70% annual EPS growth, but overpaying for Lumentum could drive its shares lower. Marvell could pay up to $110B, roughly a 30% premium; the stock-versus-debt mix is unclear, and Lumentum holders might own a third of the combined company. If the deal falls apart, Marvell could rise 10-12%. x.comÂ
Marvell is a loser from the AI-lab slowdown, because it can't earn premium margins if Nvidia and Broadcom also see a pause. Lab leaders including Elon Musk, Dario Amodei and Sam Altman have pivoted to warning that AI could kill you, which, with AI already polling badly, will make it much harder for AI to attract investment. x.comÂ
Lumentum's optics business is too valuable to sell for less than $2,000 a share, making a rumored Marvell takeover implausible. Lumentum is worth at least $2,000 a share now; a $120 billion purchase would consume about 60% of Marvell's roughly $200 billion market value, while a fair price would be closer to $160 billion in this view. x.com x.com x.comÂ
Marvell is a steal at roughly 45x forward free cash flow for a business growing 50%, with a $440 price target by late 2027. It has raised its fiscal 2028 revenue growth outlook to 50%, with roughly $18 billion of revenue now in sight and a credible, clear path to about $5 billion of free cash flow, even though the stock is down more than 25% since June. x.comÂ
Marvell's potential Lumentum acquisition may fail to increase per-share value because the added profits may not cover dilution and financing costs. A simplified calculation using reported market values implies roughly 38%-45% more shares, requiring about 45% more combined net profit to preserve EPS; debt would add interest and repayment pressure. If the price already reflects future growth, a control premium and possible customer concerns add risk. x.comÂ
Broadcom's growth opportunities support a premium despite its stock not being dirt cheap. The selloff was much needed for big winners like it. Broadcom now occupies the position Microsoft did when it was called a 'gift' at $350 and one of the simplest buys of 2026, with around 75-85% upside in 1-2 years. It is a solid risk-reward buy here and lower. x.com x.com x.comÂ
Marvell's $70-90 billion FY31 revenue target looks credible: COO Chris Koopmans said key foundry, substrate and packaging suppliers get five-year forecasts and had already seen it before investor day. A $500 price target still looks too aggressive for now; Marvell must show it can grow its networking and photonics segment to deserve a safe price increase. x.com x.comÂ
Lumentum's 109% year-on-year growth and sold-out capacity through 2029 make selling its AI optics exposure questionable. Bloomberg reported Marvell is in advanced talks to buy it; the appeal depends on the price, especially when holders of an $80 billion Lumentum would become holders of a $320 billion-plus Marvell growing 37%. x.comÂ