Marvell CEO tells Jim Cramer: We're doing much better than our stock price suggests

Published Wed, Sep 21 20226:37 PM EDTUpdated Wed, Sep 21 20226:47 PM EDT

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

Marvell Technology (MRVL) CEO Matt Murphy on Wednesday painted an optimistic long-term picture for the semiconductor company, suggesting that Wall Street has recently misjudged both the Club holding's present performance and future prospects. "The long-term opportunity for this company ... is tremendous because if you think about the end markets that we participate in — forget about share gain, forget about new product cycle. Just look at the end markets," Murphy told Jim Cramer in an interview. "The markets that Marvell is targeting are growing significantly faster than almost any other set of end markets you could focus on, and we don't have the consumer, drag which is problematic in an environment like today," the chief executive said, noting only about 10% of Marvell's revenue falls into consumer categories like printers and personal computers. That's where much of the chip industry's weakness has been concentrated this year. By contrast, Murphy said the company's most important underlying markets — like data center, 5G and automotive — have been resilient, even as Marvell shares have tumbled around 45% year to date. Higher interest rates and economic slowdown concerns have weighed on stocks across the chip industry. "The end markets, they have a big determination on a company's performance, especially in a cycle like this," he added. Data center Marvell's data center revenue grew 48% year over year to $643.4 million in the second quarter but missed estimates. The segment represented 42% of the firm's overall sales in the three months ended July 30. While Marvell's on-premise data division is seeing some softness, its cloud-focused unit is holding up better. That's important because cloud is the star of the show. It is where the secular tailwinds are blowing. Murphy on Wednesday expressed confidence about the fundamental direction of the company's business large-scale cloud customers. Here's what he told Cramer: "What we have that is unique to us is our own unique product cycles. We've won actually meaningful new business in cloud-optimized custom silicon; high-performance networking chips like switches; all the optical interconnect from Inphi, the acquisition that we [closed in 2021]; plus, storage, security. I mean, I could go on and on," Murphy said. "We've got like 12 product lines that sell into the cloud, and all these new ramps are coming.