Marvell beats forecasts, shares slip as growth outlook underwhelms

Aug. 27 (Reuters) - Marvell Technology forecast quarterly revenue above estimates on Thursday, but failed to meet lofty investor expectations after a sharp AI-fueled rally in its shares.

The Santa Clara, California-based company's shares fell nearly 3% in extended trading. They have nearly tripled in value so far this year as cloud giants increased spending on AI data centers and custom chips.

Big Tech's push to develop in-house chips that serve as a cheaper alternative to Nvidia's costly and supply-constrained processors has driven demand for Marvell's custom silicon business, making it a big winner of the data-center buildout.

Demand for such chips has also risen as AI use shifts from training models to running them, where custom chips can deliver better performance and efficiency than off-the-shelf processors.

Marvell expects third-quarter revenue of $3.15 billion, plus or minus 5%, compared with analysts' average estimate of $3.03 billion, according to data compiled by LSEG.

Adjusted profit is expected to be $1.10 per share, plus or minus 5 cents, above estimates of $1.07.

Last week, Marvell struck a custom chip deal with Google that could bring in $120 billion in revenue through fiscal 2033 and make the Alphabet-owned search giant one of its biggest investors with an up to $12.2 billion stake.

The deal is a major strategic victory, diversifying Marvell's custom chip customer base and setting it up to better challenge larger rival Broadcom, which has custom chip deals with OpenAI and has been a key Google partner.

Second-quarter sales rose 37% to $2.74 billion, beating estimates of $2.71 billion, lifted by a 46% rise in data center revenue to $2.17 billion, which also beat estimates of $2.13 billion.

Adjusted profit came in at 94 cents per share, compared with estimates of 92 cents.