Chipmaker Marvell Technology beat quarterly revenue expectations and forecast third-quarter results above Wall Street estimates on Thursday, helped by strong demand for its electro-optical products and a surge in custom artificial intelligence programs.
The company’s shares rose about 6 percent in after-hours trading.
Rising investments by big tech companies in generative AI applications are driving cloud customers to build out new data centers. This trend is fueling demand for cloud-optimized silicon solutions, such as those offered by Marvell.
“Marvell’s results and outlook clearly indicate that the worst is behind the company. While demand remained strong in the data center market, there are now early signs of demand recovery in the carrier and enterprise end markets,” said Kinngai Chan, Senior Research Analyst at Summit Insights.
Revenue from the company’s data center segment, which includes its custom AI chip business and electro-optics portfolio, rose 92 percent to $880.9 million in the second quarter, compared with analyst estimates of $865.2 million, according to LSEG data.
For the third quarter, Marvell forecast revenue of $1.45 billion, up 5 percent, compared with an estimate of $1.4 billion.
On an adjusted basis, it expects earnings per share of 40 cents, plus or minus 5 cents, compared with estimates of 38 cents.
“Next quarter, we expect our combined enterprise and carrier networking end markets to return to growth, while our data center end market growth accelerates,” said CEO Matt Murphy.
Marvell announced in April that it had won new commercial contracts to help large U.S.-based cloud computing companies design custom chips for artificial intelligence.
The company counts among its clients major corporations such as Amazon.com, which it helps develop custom chips for their cloud operations.
Revenue for the second quarter ended Aug. 3 was $1.27 billion, beating estimates of $1.25 billion.
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