The strong demand for AI has led to marvell technology's performance in the third quarter and outlook for the fourth quarter exceeding expectations.

On December 3, Eastern Time, chip company marvell technology announced that its third-quarter earnings report showed a 19% quarter-on-quarter sales increase, reaching 1.52 billion dollars, higher than Wall Street's forecast of 1.46 billion dollars; the eps was 43 cents, exceeding the expected 41 cents.

Marvell technology also expects fourth-quarter revenue to reach approximately 1.8 billion dollars, higher than the anticipated 1.65 billion dollars, with an expected eps of 59 cents.

CEO Matt Murphy stated in the announcement that the main factor driving growth this quarter is the strong AI demand, as the company has provided new custom AI acceleration chips for amazon and other 'hyperscale' datacenter builders, which support the current large AI software model running.

As of the time of publication, marvell technology's stock price has risen more than 11% in after-hours trading. Since the beginning of the year, marvell technology's stock price has accumulated a 65% increase.

Sales of AI products compensated for the decline in traditional business.

Analysts believe that marvell technology is undergoing a business transformation, with the sales growth of advanced AI products in the third quarter offsetting the significant decline in sales of products in the telecom, auto, and other sectors year-on-year.

According to the report, marvell technology's sales of non-datacenter products decreased from 0.85 billion dollars in the same period last year (accounting for 60% of total revenue) to 0.415 billion dollars in this quarter (accounting for 27% of total revenue).

Products from the datacenter such as high-speed networking equipment and next-generation custom computing chips have become a lifesaver, with sales doubling year-on-year to reach 1.1 billion USD. According to media reports, major technology companies like amazon, google, and microsoft plan to use these products from marvell technology to replace the expensive and supply-constrained nvidia and AMD processors.

Oppenheimer analyst Rick Schafer predicts that the sales of four custom chips from marvell technology could each reach 1 billion USD next year. Currently, amazon's Trainium chips and google's Axion chips have already begun mass production. Another chip from amazon, the Inferentia, is expected to start production in 2025. By the end of next year, microsoft's Maia-2 chip will begin delivery.

Murphy also mentioned during the conference call that the agreements signed by marvell technology with custom chip customers cover these chips' "multi-generational products," with a plan that by 2028, marvell technology could attain a 25% share of the datacenter acceleration chip market, which would generate over 40 billion USD in revenue for the company.

Editor/ping