Marvell stock price surged, but a risky candle pattern is a red flag

Marvell Technology is a semiconductor company that provides services to firms in the data center. It is a fabless company that makes products for data center, enterprise networks, carriers, consumer, and industrial. Its products include ethernet switching, AI servers, storage systems, routers, and optical transport systems.

As a result, Marvel Technology’s business has done well this year as demand for artificial intelligence led to a resurgence in data center demand. Its annual revenue has soared from over $2.7 billion in 2019 to $5.5 billion in the last financial year. This growth has pushed its market cap to over $96 billion, making it bigger than Intel, a company that makes 10 times its revenue.

Marvell stock was trading at $113.75, while the HypeIndex metric rose to 77%.

Learn more about the MRVL stock here.

Positive hype

• Marvell’s hype has surged because of its strong performance. Its stock has jumped by 90% in 2024, beating the Nasdaq 100 and S&P 500 indices. It has also beaten other popular semiconductor companies like Texas Instruments and Applied Materials.

• Marvell published strong financial results that revealed its revenue rose by 7% in the third quarter to $1.8 billion as demand accelerated. This growth happened as data center has helped to boost its business as its annual revenue rose to $1.1 billion.

• The company has inked a strong partnership with Amazon, one of the biggest American companies. Amazon will use its chips to run the biggest data center network in the world. 

• Analysts believe that the deal with Amazon will push Marvel’s annual revenue to $8 billion in 2026, up from 40% from 2025. They also see the company getting another big order from either Microsoft or Google. 

• Most analysts have a bullish outlook for the stock, with the most notable ones being Morgan Stanley, Goldman Sachs, Citigroup, and Cantor Fitzgerald. 

Negative hype

• Marvell has a lot of exposure to the booming AI sector, putting it at risk if the industry goes through a slowdown.

• The company, as we wrote earlier, has become highly overvalued. This is a $100 billion company whose annual revenue for 2026 is expected to be $8 billion. Marvell has a forward P/E ratio of 42, making it a highly expensive company. 

• More so, it has an enterprise value to EBITDA ratio of 250, higher than the 74 that it had a few months ago. 

• The company may soon lose Matt Murphy as the CEO as rumours say that he will be appointed the next head of Intel, the struggling chip company. Management changes often lead to substantial changes in a company. 

Marvell stock price analysis

The weekly chart shows that the MRVL stock price has been in a strong bull run in the past few months. It crossed the important resistance level at $92.50 on November 25. This was a crucial level since it was the highest swing in December 2021.

The stock has moved above all moving averages, a sign that bulls are in control for now. Also, momentum oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. 

However, the shares have also formed a bearish engulfing pattern. This pattern happens when a big red candle follows and completely follows a smaller blue or bullish one. Therefore, the stock will likely drop and retest the support at $92.50, its highest level in December 2021.

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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.