Marvell Surges 32% as Nvidia CEO Calls It 'Next Trillion-Dollar Company'

The share price of Marvell Technology (MRVL) rose 32.52% on Tuesday, which was the biggest one-day gain ever and just barely beat the previous record set in May 2023. This happened after Nvidia CEO Jensen Huang called Marvell "the next trillion-dollar company" during an onstage appearance with Marvell CEO Matt Murphy at Computex Week in Taipei on Monday.

As of Tuesday night, the chip company had a market value of just over $250 billion. For a value of a trillion dollars, prices would have to go up about four times from where they are now.

The company that makes custom chips makes fast chips for data centres, cloud computing, AI, corporate networking, 5G carrier networks, and car systems.

Marvell recently said that its custom chip business would make more than $10 billion by fiscal year 2029. This is because more money is being put into AI data centres. Silicon has been made by this company for cloud giants like Amazon (AMZN) and Microsoft (MSFT).

What Moved the Market: Huang's Connectivity Thesis

The spark came on stage. Huang made a plan for why Marvell is important. "When you take a computing problem, and you disaggregate it into a lot of parts, and you distribute it across the entire data centre, what's necessary is connectivity," he explained. "That's why Matt is doing so well. That's the reason Marvell is so important.

He further stated: "We've distributed and disaggregated computing so that it runs across these enormous clusters, so that we could get aggregating the total compute, the total memory, the total bandwidth that we have, and what makes it possible is connectivity."

It was easy to understand. As AI jobs get bigger and spread across thousands of connected chips, networking and connectivity silicon turns into both a problem and a chance. At the heart of that infrastructure layer are Marvell's optical networking chips and custom AI processors, which are often just called "XPUs."

The $2B Nvidia Bet and the Trillion-Dollar Club

The support from Nvidia is backed by money. The company recently promised to invest $2 billion in Marvell as part of a strategic partnership that was first revealed earlier this year.

Nvidia is also putting billions of dollars into other companies that are working on photonics technology. Photonics technology uses light to send data, which is faster than using electricity.

For chipmakers, the trillion-dollar club is no longer just a thought. Micron Technology (MU), Samsung Electronics, and SK Hynix all reached values of more than $1 trillion for the first time last month.

At the moment, 11 U.S.-listed companies are worth more than that amount. Huang's comment makes it sound like Marvell might be the next big name in semiconductors to join. 

However, with a market value of $250 billion, the stock would have to more than triple before it could join.

Marvell made more money than expected in the first quarter of 2027. It made $2.4 billion in sales and expected to keep growing for the rest of the fiscal year because its data centre business was doing well.

The structural number that supports the re-rating of value is the $10 billion custom chip income goal by 2029.

That is how much the market value needs to grow four times in order to reach Huang's trillion-dollar call. The huge jump of 32.52% in just one day shows how quickly the market is pricing in AI infrastructure control.

The goal of making $10 billion in custom chips by 2029 is the main anchor. If Marvell can reach this goal, the present valuation has room to grow.

The current quarterly run rate for sales is $2.4 billion. The data centre business is what's going on. Check back in two quarters to see if Marvell can announce any new hyperscaler design wins with Microsoft, Amazon, or other cloud giants, or if the $2 billion deal with Nvidia was the main event.

It's the trade's clock that Nvidia put in $2 billion. That capital supports the idea of connectedness. While action on income turns it into money. On the next earnings call, we'll find out if the 32% increase was due to pipeline or if it was just a keynote-driven spike that needs time to settle down.

The trillion-dollar club has 11 members. Marvell wants to be the 12th. The connectivity layer is the path.