This artificial intelligence (AI) chip stock has stepped on the gas and could fly higher after August 29

Actions of Marvell technology (MRVL 1.29%) are up 14% year-to-date, and there’s a good chance the stock will have a good run when it releases its fiscal 2Q25 results on August 29.

Although Marvell may be behind the 22% gain recorded by PHLX Semiconductor Sector index, the company’s growing revenue from sales of artificial intelligence (AI) chips drives outstanding results for its data center segment.

However, Marvell is facing tough times in its other business segments, prompting investors to hit the panic button the last time it reported earnings. However, it won’t be surprising to see the company put this weakness behind it with its upcoming quarterly report. Here’s why this semiconductor stock could surprise and sustain its rally after August 29.

Marvell Technology’s results should point to a recovery

When Marvell released its fiscal first-quarter results in late May, the company’s revenue fell 12 percent year over year to $1.16 billion. Its non-GAAP earnings fell to $0.24 per share from $0.31 per share in the year-ago quarter. The year-over-year decline in Marvell’s top and bottom line results was the result of weakness in nearly all of its end markets.

The company’s revenue from its enterprise networking, carrier infrastructure, consumer and automotive/industrial businesses fell sharply due to weak demand. The data center business was the lone bright spot, with revenue up 87 percent year-over-year to $816 million, accounting for 70 percent of total revenue.

A closer look at management’s comments on the May earnings call suggests the company expects a turnaround in some of its battered business segments. For example, the enterprise networking and carrier infrastructure markets are expected to bottom out in the fiscal second quarter and improve in the second half of the fiscal year.

Those two segments together produced 19 percent of Marvell’s top line in the fiscal first quarter, so a recovery in those markets will move the needle for the company overall. Meanwhile, the data center segment could continue to grow stronger due to strong demand for Marvell’s application-specific integrated circuits (ASICs) and network chips, which are used to process AI workloads.

The company has targeted $1.5 billion in AI revenue this fiscal year, which would be a big jump from the $550 million in fiscal 2024. That number should grow further to 2 .5 billion by fiscal 2026. Analysts expect Marvell to generate total revenue of $5.4 billion for fiscal 2025, roughly unchanged from last year. Based on this forecast, AI-related sales could account for 28% of Marvell’s top line this year.

More importantly, the incremental growth Marvell expects from AI-driven sales in fiscal 2026 explains why its revenue growth is slated to accelerate significantly.

Data by YCharts.

The company’s growth is poised to ignite

There’s a good chance that Marvell can sustain such healthy revenue growth beyond the next two fiscal years. That’s because the company anticipates its addressable opportunity from custom computing chips deployed in AI data centers to grow at an annual rate of 45% through 2028, generating nearly $43 billion in revenue by the end of the forecast period .

Meanwhile, Marvell estimates that the data center switch and interconnect equipment market could see a compound annual growth rate (CAGR) of 15% and 27%, respectively, through 2028. Overall, it expects the overall opportunity to The company’s AI revenue is expected to grow from $21 billion last year to $75 billion in 2028, at a CAGR of 29%. In addition, Marvell aims to double its share of this emerging market opportunity to 20% over the long term.

This potential for a larger share of fast-growing markets likely explains why analysts are forecasting remarkable growth in the company’s earnings.

Data by YCharts.

Marvell Technology could prove to be a top AI stock over the long term. At the same time, a rebound in its troubled segments could further support the company’s growth and help it deliver better-than-expected results and guidance on Aug. 29, which is why investors should consider buying Marvell Technology before it grows.