Marvell's AI Bookings Are Stellar. But Its Gross Margin Guide Is What Moved the Stock.

Marvell Technology reported second-quarter fiscal 2027 revenue of $2.739 billion, up 37% year-over-year, and raised full-year guidance—but shares dropped 8% after hours as the company guided gross margins lower. Non-GAAP gross margin fell to 58.9% from 59.4% a year earlier, and management expects third-quarter gross margin of 57.5% to 58.5%.

The compression stems from MRVL's fast-growing custom AI chip business, which now accounts for a significant portion of revenue but carries lower margins than the company's traditional product mix. While AI bookings hit record levels, the profitability trade-off spooked investors despite the top-line beat and raised outlook.

The quarter underscores the margin pressure semiconductor companies face when scaling custom silicon for hyperscale customers. MRVL is prioritizing revenue growth in AI infrastructure, accepting near-term margin dilution as the price of market-share capture in a category expected to drive long-term demand.