Marvell Technology Inc (NASDAQ:MRVL) stock plunges 16.44% (As on March 6, 11:16:35 AM UTC-4, Source: Google Finance) after the company delivered a revenue forecast that fell short of the highest estimates, disappointing investors who were looking for a bigger payoff from the AI boom. AI-related companies suffered a stock rout this year after investors grew worried that customers will slow their spending. Chinese startup DeepSeek added to the concerns when it released an AI model that it claimed was relatively cheap to produce, signaling that the industry may not need as much costly equipment. The company ended the year with the AI revenue substantially above the $1.5 billion target from April 2024s AI day, and the company also expects to very significantly exceed the $2.5 billion target in fiscal 2026. The overall revenue growth accelerated in the second half of the year, driven by the custom silicon program ramps, along with continued strong growth in electro-optics. In fiscal 2025, the company also drove a record $1.68 billion in operating cash flow.

Additionally, the company benefited from strong shipments of our electro-optics products and Teralynx ethernet switches with revenue from both product lines growing double digits sequentially on a percentage basis. Within the electro-optics franchises, the company continues to see strong demand for the market-leading 800 gig PAM products and the 400 ZR DCI products. The company has also began shipments of the industry’s first 1.6T PAM DSP and five-nanometer process technology. In addition, the new Marvell DSP enables customers to reduce 1.6T optical module power consumption by more than 20% compared to its predecessor. And the company expects to go into production in the second half of this year as 1.6T adoption accelerates.

MRVL in the fourth quarter of FY25 has reported the adjusted earnings per share of 60 cents, beating the analysts’ estimates for the adjusted earnings per share of 59 cents. The company had reported the adjusted revenue growth of 27 percent to $1.82 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $1.8 billion. The data center end market was the primary growth driver, fueled by strong AI demand and execution.

Sales will be about $1.88 billion in the fiscal first quarter, which runs through April. Though that was in line with the average analyst estimate, some projections ranged as high as $2 billion. Marvell expects earnings of 56 cents to 66 cents a share in the first quarter, excluding some items. Analysts had projected 60 cents.