NiveaS (NVDA -2.08%) The results for the second quarter of fiscal 2022 (for the three months ending July 31, 2022) sent shock waves through the tech industry. dead end.
However, a closer look at Nvidia’s quarterly results reveals that the decline is limited to one area: video gaming. A 33% decline in revenue from sales of gaming graphics cards weighed heavily on Nvidia’s quarterly results. The company had to struggle with the supply of GPUs (graphics processing units) as cryptocurrency miners sold off chips and demand from gamers weakened.
As a result, NVIDIA has been forced to reduce the price of GPUs to move more units, and the partners who sell the products are placing lower orders. That’s part of an ongoing inventory correction caused by weak demand and high supply.
However, not all semiconductor stocks are in the same boat. Advanced Micro Devices Nvidia’s rival, however, has recently delivered strong results and sunny guidance. Anna now Marvel Technology Group (MRVL -0.46%) It has shown that the slowdown in semiconductor demand may indeed be a myth. Let’s see why.
Marvel technology gives amazing results
Marvel Technology released its fiscal 2023 second quarter results (for the three months ending July 30) on Aug. 25. The chipmaker’s revenue grew 41 percent year-over-year to a record $1.52 billion. The company reported adjusted earnings of $0.57 per share for the quarter, up from $0.34 per share last year.
What’s surprising is that the chipmaker has registered this growth despite supply issues. Marvell’s CEO indicated in the latest earnings conference call that he expects to “see healthy demand for our products, except for consumer HDDs, and that our overall demand exceeds supply.”
The company serves multiple end markets such as data centers, automotive, enterprise networking, carrier infrastructure and consumer. This diversity allows Marvell to overcome any weakness in certain pockets of the semiconductor industry. It also explains why the company’s presence in fast-growing semiconductor markets such as data centers, service provider infrastructure and automotive is better positioned than peers such as Nvidia.
For example, Marvell’s data center business grew 48 percent year-over-year to $643 million last quarter. The company believes that the data center will be the “single largest long-term growth driver,” which is not surprising since Marvell sells a lot of chips — data processing units (DPUs), Ethernet controllers, storage accelerators and more — that power data centers. Demand for data center chips is expected to grow at an annual rate of 21 percent through 2027, so it wouldn’t be surprising to see Marvell continue its impressive growth over the long term.
At the same time, the automotive market has begun to experience a remarkable revival. The division’s revenue rose 46 percent year over year to $84 million last quarter. While this business currently only accounts for 6 percent of the company’s total revenue, it could move the needle in a big way for Marvell in the long run. That’s because Marvell is seeing strong design-win momentum in the automotive business, which means its chips are being chosen for deployment by OEMs and component suppliers.
For example, Marvell says its automotive Ethernet chips have been selected by “eight of the 10 largest OEMs worldwide and a total of 36 OEMs.” The Automotive Ethernet market in 2015 This puts Marvel on track to take advantage of another incredible opportunity, as it’s expected to grow at 21 percent annually through 2026.
Why Marvell stock is a better bet than Nvidia right now
It’s worth noting that the automotive and data center markets delivered impressive growth for Nvidia last quarter. But the company’s confidence in its gaming business weighed on its performance by 30% on its top line. On the other hand, Marvel earned 42% of its revenue from the data center business. The automotive, carrier infrastructure, and enterprise connectivity markets grew 6%, 19%, and 22% from the top line last quarter.
These global, fast-growing opportunities should help Marvel continue its impressive growth in the long term. This explains why analysts expect the bottom line to grow at a 42% annual rate for the next five years. On the other hand, Nvidia’s revenue is expected to grow at an annual rate of 23 percent over the next five years.
However, Nvidia trades at 13 times sales and 45 times earnings. Marvel, on the other hand, trades at seven times sales and has an earnings multiple of 21.
More importantly, the company is insulated from the headwinds that Nvidia is now facing. This comes on top of the company’s impressive growth last quarter and a strong outlook for this quarter, which calls for $1.56 billion in revenue, a 29 percent increase from last year. Nvidia, by comparison, gave a dire outlook in the current quarter, indicating significant declines in both its top and bottom lines.
So investors looking to buy top semiconductor stocks right now might want to turn their attention to Marvell Technology — not only is it cheaper than Nivea, but its business is in healthy shape.
