Marvell Set for Gains After Nvidia CEO’s ‘Trillion Dollar’ Projection
Nvidia CEO Huang believes Marvell Technology is a $1 trillion stock.
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Jensen Huang knows how to generate excitement. The Nvidia CEO declared that the AI chipmaker Marvell Technology (MRVL) could become the “next trillion dollar company”.
Huang knows a thing or two about $1 trillion companies. He runs Nvidia, the largest publicly traded U.S. company by market capitalization, boasting a value of $5.39 trillion. According to our latest analysis, Nvidia is on track to reach $285 per share, a move that could raise Nvidia’s valuation to nearly $7 trillion.
A Trillion-Dollar Marvell
Huang’s bold statement, given at a tech conference in Taipei on Monday, drove Marvell shares to an all-time high, soaring by 32.5%. It also pushed the stock’s market capitalization above $250 billion for the first time.
That last figure is the key to understanding the significance of Huang’s prediction. Even after Tuesday’s outsized 32.5% gain, Marvell Technology, a Santa Clara, California-based AI infrastructure facilitator, is only a quarter of the way to the coveted trillion dollar mark.
Assuming that the number of shares remains constant, the stock would have to climb from its $290 closing price on Tuesday to above $1100 per share in order to reach a market cap of $1 trillion.
A Realistic Prediction?
Marvell Technology has already gained 225% this year, and has climbed 373% over the past 12 months. Huang is suggesting that even after that incredible run, shares could quadruple from here.
Is that a realistic prediction? The momentum in AI-related tech stocks is overwhelming right now, and as the old saying goes, a rising tide lifts all boats. Momentum-driven markets like the one we’re in now are rare, and they don’t always last. Will this one last long enough to see Marvell shares quadruple?
An Uphill Climb
Even after Tuesday’s close, Marvell shares continued to rally. It’s only a question of how long AI infrastructure stocks can sustain this pace.
What if the rapid, outsized gains that we’ve recently seen become harder to attain? Massive initial public offerings by SpaceX, OpenAI and Anthropic could weigh down the major indexes, as explained here.
A major secondary offering by Google parent Alphabet (GOOGL), to pay for the company’s massive AI infrastructure buildout, is also on the way.
Does this mean the AI infrastructure rally will end? Not necessarily, but we might have to be a bit less aggressive. The SpaceX IPO is scheduled to launch on June 12.
A Tough Call
What makes Marvell Technology special? According to Huang, it’s networking and connectivity. Marvell’s technology allows thousands of independent AI chips to work in unison.
Marvell may indeed be special, but if markets become uncooperative, Huang’s lofty target may prove difficult to achieve. On the other hand, Marvell presents a rare opportunity to buy a red hot stock, within a very hot sector, within a strong bull market.
Bottom Line
I hate to buy anything at the highs. I usually wait for pullbacks. This time, I’ll compromise.
I’m opening a small long position in Marvell Technologies and will add to it on a pullback, if one occurs. I’m not counting on Marvell to become a $1 trillion stock, but the momentum is overwhelming, and the path of least resistance points higher.
At the time of publication, Ponsi was long MRVL.
