Divesting from the automotive business and focusing on core strengths, Morgan Stanley is optimistic about Marvell Technology, Inc. (MRVL.US) exceeding performance expectations.

Morgan Stanley says that Marvell Technology, Inc. (MRVL.US) may provide better-than-expected guidance when announcing its latest quarterly performance, amid recent concerns over the sale of its Automotive Ethernet business and market worries about Amazon.com, Inc.'s Trainium chip. Marvell Technology, Inc. is scheduled to release its financial results for the second quarter of the 2026 fiscal year after the U.S. market closes on August 28 (early morning of August 29 Beijing time). The market generally expects the company to report adjusted earnings per share of $0.67 and revenue of $2.01 billion for the quarter. Earlier this month, Marvell Technology, Inc. completed the sale of its Automotive Ethernet business to Infineon for $2.5 billion. The business is expected to contribute revenue of $225-250 million in the 2026 fiscal year. Joseph Moore, an analyst at Morgan Stanley, said, "We expect the optical business to bring upside potential this quarter; after divesting the automotive business, we slightly lowered our expectations, but excluding that impact, we expect the guidance to be positive." Moore added, "Artificial intelligence business revenue is expected to be $876 million in the July quarter (up 6.6% qoq) and $955 million in the October quarter (up 9.0% qoq), with ASICs showing the fastest growth. We believe that with the strong momentum in artificial intelligence driving the business, the performance of the optical business may exceed our expectations. Compared to the prospects of ASICs, we are more bullish on the prospects of the optical business... Despite ongoing supply issues in the short term, we believe the optical business is stronger than generally believed, more sustainable, and more profitable than the ASIC business... The debate over Trainium 3 may continue, but we believe we are past the stage of overly high expectations, and we expect ASIC business revenue to steadily reach $2 billion this year." Regarding other artificial intelligence stocks, Morgan Stanley believes Micron Technology, Inc. (MU.US) will face negative sentiment in the coming quarters. Moore said, "For Micron, the high-bandwidth HBM3 memory pricing will reset next year with at least one customer - NVIDIA Corporation (NVDA.US) - committing to annual pricing for 2025. However, market sentiment is quite negative, and we expect HBM to maintain a significant premium over DDR5, despite the premium narrowing."