Marvell Soars on +$6B in Buybacks—Can the Recovery Continue?
In 2025, one of the more disappointing artificial intelligence (AI)-driven stocks in the market has been Marvell Technology (NASDAQ: MRVL). Year-to-date, shares have provided a total return of around -25%. Meanwhile, rival semiconductor company Broadcom (NASDAQ: AVGO) has returned more than 44%. However, Marvell recently gave its share price a shot in the arm.
On Sept. 24, the company announced a massive new share buyback program. This inspired a significant amount of confidence among investors. Shares gained by approximately 12% on Sept. 24 and Sept. 25 combined. Below, we’ll break down why this announcement is particularly bullish. We’ll also detail another key piece of information that signals Marvell’s recovery can continue.
Marvell Adds Big-Time Buyback Capacity in Late September
Marvell’s latest buyback authorization includes multiple moving parts. First off, the company has authorized a new $5 billion share buyback program. Through this, the company can substantially lower its outstanding share count over time. This can provide a tailwind to key “per share” metrics, such as earnings per share (EPS) and free cash flow (FCF) per share. Markets use these metrics to value companies, so providing an additional avenue to increase them can often lead to higher share prices. With $5 billion representing around 7% of Marvell’s $71 billion market capitalization, the company could substantially influence these figures upward.
The move also signals confidence from Marvell’s management team. When a company buys back its shares, it is essentially investing in itself. Thus, increasing its capacity to buy its own stock implies that the company sees significant value in shares near current levels. Given the precipitous fall in Marvell shares, it is not overly surprising to see Marvell make this decision. Shares would need to rise by around 53% to get back to their all-time high closing price, indicating the significant opportunity it has to recover.
ASR Signals Undervaluation, Helping Shares Take Off
Marvell also entered into a $1 billion accelerated repurchase authorization (ASR), a particularly bullish wrinkle in the announcement. Through an ASR, a company employs an investment bank to buy back shares quickly. This makes an ASR one of the clearest indicators that a company sees its stock as undervalued. This is because the company is moving to buy back stock rapidly to lock in value. An ASR also involves paying fees to the financial institution. This makes its opportunity cost higher relative to open-market buybacks. Marvell's choice to accept these costs emphasizes that management believes the market undervalues its shares.
When accounting for the new $5 billion buyback, the ASR, and the remaining funds from its March 2024 authorization, Marvell has around $6.7 billion in buyback capacity. That is equal to a very large 9.4% of its market capitalization. This should allow Marvell to significantly support metrics like EPS, and in turn, its share price.
Marvell Eases Amazon Concerns, Recovery Looks Promising
Marvell shares have only moved from around $75 to $82 prior to the repurchase announcement to the Sept. 29 close. Thus, there is still reason to believe that management sees much more upside in shares. Analysts at Needham and Deutsche Bank raised their price targets after the buyback announcement. They set them at $90 and $95, respectively, suggesting that Marvell’s recovery still has room to run. Overall, the MarketBeat consensus price target on Marvell is just over $91, implying around 11% upside in shares.
Currently, the biggest issue surrounding Marvell is its relationship with Amazon.com (NASDAQ: AMZN). Amazon is the leading customer of Marvell’s custom AI chips, but Taiwanese rival AlChip claims it won the design competition for a future custom AI chip. This news has greatly dampened sentiment around Marvell, sending shares down. However, at a JP Morgan Fireside Chat on Sept. 24, Marvell’s Chief Executive Officer, Matt Murphy, directly addressed this concern. He said that Marvell sees no revenue hole from its relationship with Amazon next year, bolstering the outlook for shares.
Notably, analyst Harlan Sur was the Fireside Chat interviewer. He believes the “only reasonable interpretation” of Murphy’s comments is that Marvell is participating in the next-gen custom AI chip program with Amazon. Sur’s highly bullish $120 price target on Marvell implies around 46% upside in shares. With this and the bullish signals management is sending in mind, Marvell has a solid chance of continuing its recovery.
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