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Shares of Intel (INTC), Arm Holdings (ARM), and Marvell Technology (MRVL) have fallen by about half in five months. This is due to concerns that the expansion of AI data centers may slow down. All three stocks hit their all-time high closing prices in June.
Intel's closing price on November 4 was $58.27, about 59% lower than its highest closing price on June 22. Arm fell about 56% from its peak on June 18, and Marvell fell about 50% from its peak on June 4. Among the three stocks, Marvell is the only one whose revenue growth is expected to accelerate even as its stock price declines.
According to the investment professional media The Motley Fool on November 6 (local time), the three stocks fell by 4-7% on November 4 alone and continued to fall on the 5th. Investors questioned whether the Democratic Party's midterm election victory could slow down the pace of AI data center construction. In particular, the election of a governor in Texas who pledged a moratorium on new data center construction became a burden. Nevertheless, all three stocks are up more than 40% this year.
Intel's third-quarter performance was strong, but its fourth-quarter guidance (the company's performance outlook) presented on October 29 held it back. The forecast for adjusted earnings per share (EPS) for the fourth quarter is $0.25, less than half of the $0.52 in the third quarter.
As memory prices rose, new PC prices surged, and Intel projected that revenue from its PC chip division would decrease by more than 20% compared to the third quarter. Demand for server chips exceeds supply capacity. However, Chief Financial Officer (CFO) David Zinsner believes that the weakness in the PC segment will continue until at least mid-2027.
Arm announced its fiscal year 2027 second-quarter results (three months ended September 30) on November 4. Revenue was $1.44 billion (approximately 1.9642 trillion KRW). Royalty revenue, which is the fee Arm receives each time a partner ships an Arm-based chip, grew by only 8% year-over-year, slowing down from 22% in the first quarter.
Arm explained that rising memory prices pressured the smartphone market, offsetting some of the growth in other segments. License revenue surged by 50%. Management considered this a leading indicator for future royalty growth.
Marvell is the opposite. Since fiscal year 2027, its quarterly revenue growth rate has increased, reaching 37% year-over-year in the second quarter (up to August 1).
Marvell announced on November 2 that its third-quarter revenue is on track to meet its guidance of $3.15 billion (approximately 4.2966 trillion KRW). The margin of error is within +/- 2%. This is approximately 52% higher than the same period last year.
On the same day, Marvell agreed to acquire optical component manufacturer Lumentum Holdings (LITE) in an all-stock transaction. Lumentum's enterprise value, including debt, is approximately $115 billion (approximately 156.86 trillion KRW). Lumentum shareholders will receive 4.5 shares of Marvell stock for each share, and existing Marvell shareholders will own approximately two-thirds of the combined entity. The acquisition is expected to be completed in the first half of 2028, subject to approval from shareholders and regulatory authorities.
Based on current stock prices, Intel trades at approximately 36 times its estimated earnings for 2026, and Arm trades at approximately 56 times its estimated earnings for the next fiscal year (ending March 2028). Marvell, looking at its own business, trades at approximately 19 times its estimated earnings for fiscal year 2028 (ending January 2028).
The Motley Fool writer assessed that Intel and Arm stocks are still expensive. It pointed out that Marvell's price-to-earnings ratio based on next year's estimated earnings is about one-third of Arm's. Marvell's projected acceleration in revenue will be verified by quarterly results before the Lumentum acquisition is finalized.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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