Bank of America analyst Vivek Arya says Marvell's "XPU attach" business — the components that support its custom chips inside data centers — could generate $30 billion in revenue by the end of the decade. He kept a buy rating on the stock, which gained nearly 178% so far this year.
Marvell Technology's custom chips have made it a major beneficiary of the data-center build-out, but Arya argues the bigger opportunity sits elsewhere. He points to an end-to-end connectivity portfolio that layers on more customers and products each year, driving rapid growth in the company's revenue and earnings.
XPU attach called stickier than XPU business
Marvell refers to its custom chips as XPUs and to the surrounding components — networking and storage controllers — as XPU attach. According to MarketWatch: "much stickier" is how Arya described the attach business relative to the XPU business itself, meaning customers return to and engage with it more.
If each chip carries one or more sockets, and each supporting component sells for an average of $500 to $1,500, Arya calculates Marvell could reach $30 billion in XPU attach revenue by the end of the decade. He expects the total addressable market for these supporting components to reach $60 billion to $65 billion or more by then, with the wider custom-computing market — chips plus supporting parts — approaching about $300 billion.
Customer base widens beyond AWS
Arya noted that lead custom-chip customer Amazon Web Services is expected to keep growing each year, while Marvell plans to start ramping custom products with Microsoft next year, which he said should help it gain share in the custom-chip market. He added that Marvell doesn't see a threat to its optics business from Amazon's recent move to work with Qualcomm on optical-connectivity components.
Separately, KeyBanc analyst John Vinh has pointed to a comparable opportunity in scale-up networking, estimating a $30 billion total addressable market by 2030, split between optical technologies and switching capabilities, and raising his price target on the stock by 48% to $385.
Stock climbs on the thesis
Marvell shares rose 4% on Friday following Arya's note, part of a run that has left the stock up nearly 178% for the year. Arya maintained his buy rating on the stock.
Sources: MarketWatch, Crypto Briefing
Trading involves risk.
Risk Disclaimer
