MRVL has an attractive risk-reward profile; raised price target to $360 based on credible management guidance for >50% annual growth through 2030.

take a look at the chart showing Marvell's stock performance over the past year. We are losing some momentum today, but we were on a big rise yesterday thanks to the positive guidance on Investor Day.

It was among the best performers in the S& P 500 index, but we have fallen back from the high levels of the summer . We are climbing again at the moment, as you can see. We have raised our rating on the stock to $360 from $300 previously, and we still believe there is an attractive trade-off between risk and return for investors at these levels, especially with the slight dip this morning as I mentioned.

But the real news was in these directives. We had been expecting tremendous growth over the next three to five years for Marvell , but simply put, the guidance revealed by management yesterday exceeded all our projections .

We believe it is important to note that we view the management's objectives as highly credible. This is the latest in a series of years in which management set goals that initially seemed overly optimistic and then achieved them, resulting in that impressive chart of stock performance that I just showed.

One thing I've noticed with this stock in terms of the reward it offers investors is the level of visibility it provides. I mean, is this the story of this stock? Their ability to look to the distant future in a field that was traditionally considered cyclical is such that they challenge this kind of conventional theory for a company like this.

Well, we believe it is a fundamental shift in this age of artificial intelligence, where we see customers at all stages of the supply chain responding to supply constraints and huge demand through multi-year spending commitments to try to secure deals and supplies.

Therefore, we do not necessarily believe that this is a dynamic specific to Marvell alone, but rather an indicator of the size of the demand and the tightness of the supply chain in the artificial intelligence infrastructure .

correct. Why does this matter to Marvel? I mean, what does this mean for the artificial intelligence industry as a whole? Because it was interesting on a day like yesterday to see the stock receive a bonus, while semiconductors as a whole lagged behind the entire technology sector.

So, they have a lot of multi-purpose goals, as they call them, and they really span across what we call computing and connectivity. Now, optics has become a very popular trend in the market this year.

Marvell is a leader in the field of optics. It essentially manufactures processing chips that convert light signals into electrical signals. This is of great importance in artificial intelligence networks, as it effectively determines how graphics processing units communicate with each other in AI data centers .

But Marvell is also active in creating custom AI processors, which we call "XPUs". It is a competitor to Broadcom , and to companies like MediaTek, and many other networking and communication technologies, which is what we call that.

Thus, there are a large number of areas in which the company is involved within the artificial intelligence infrastructure . It is strongly present in data centers, and what we are really seeing is that it is operating at full capacity in all these growing areas, but I consider the two biggest areas to be computing and optical connectivity.

Okay, yes. I mean, it's obviously more diverse too. But I mean, up more than 200 % since the beginning of the year, I understand what you're saying about spending, but are expectations rising even higher for these stocks? Is it getting more difficult?

I think so, but when you look at the growth rates they are promising , they are even exceeding a very high ceiling . I mean, we are looking at annual growth over the next five years that is above 50% and close to 60% as annual growth.

We are talking about going from sales of $8 billion last year to an average of $80 billion in sales in 2030. That's a 10-fold increase over 5 years. Therefore, I agree with you that expectations are too high for these stocks to justify these valuations.

However, when you look at the guidelines that Marvel has provided, I think if they achieve that, they will far surpass this level.