MRVL investor day guidance ($70-90B rev by 2031) drives bullish sentiment via analyst upgrades; caution noted on high bar risks from potential AI spending slowdown or recession.

More and more analysts are expressing their admiration for Marvell today following its investor day. Among them, TD Coin raised its rating on the stock to "buy" with a target price of $350.

This indicates an increase of more than 20% from yesterday's closing levels.

Analysts say: "The core growth engines have now shifted entirely to the company's strong communications business , and the concentration risks associated with bespoke programs have been greatly reduced."

It's not the only company that's growing more convinced about Marvel after Investors Day, as the company raised its revenue forecast.

JPMorgan Chase raised its price target to 360 , while RBC Capital raised its outlook on the stock to 425 with an "outperform" rating.

I believe that the outcomes of Investors Day, some of the statements that were made, their growth, their partnership with Nvidia, and their performance, all contributed to raising the valuations.

What about this? Their CEO came out this morning and said that revenues could exceed 30 billion by 2028. The five-year forecast they provided was amazing by all measures and catalyst for the stock, and that's why I think we're seeing a lot of analysts flocking to this stock after Investors Day.

They seem to be at the heart of everything that happens in the field of artificial intelligence. Some figures show that revenues for 2028 have been raised to 20 billion, of which 18 billion will be from data centers, exceeding estimates.

Revenues for 2029 from dedicated programs have been raised to more than 12 billion. The 2031 framework anticipates a range of between 70 and 90 billion. I mean, the numbers they're putting forward present a completely new perspective on this name in the future.

So, yes, as I said, I think we should have a calendar of these investor days in advance because they are really tradable events. The figures presented by Marvel were unbelievable .

Well, going this far in guidance was unusual for some technology companies, because now you have a high ceiling to reach. They projected that revenues would reach between $70 billion and $90 billion by 2031, with gross profit margins ranging between 56% and 59%.

Both figures are significantly higher than analysts' market estimates for the next phase. They provide broad guidance , but you have to wonder when the stock has risen 230% this year, if they've even started putting out these numbers.

They must feel very comfortable with these figures they are presenting at this stage.

I think this gives investors more confidence. Now , the stock is pulling back a little , but we are still close to the all-time highs we saw a few months ago for Marvell's future.

And remember, if you look not only at the 2028 estimates, where in August they gave an estimate of about $18 billion, they are now raising it to $20 billion.

I think this reflects what we have seen with regard to spending, because we have all been waiting to see when spending on building AI infrastructure will stop or decline. Companies that provide essential AI tools, such as Marvell at this stage, Nvidia and others.

Well, this might give you an indication that things aren't slowing down . According to Marvell, investments will not slow down over the next five years. This is the only thing that worries me a little.

When you provide long-term guidance like this, you are setting a very high bar for your company and for the overall health of technology investment going forward.

So, what are the gaps here? What if a recession occurs? What if a decline occurs? What if there was a different path for these companies? What if the competition entered the picture here ?

This could negatively affect profit margins or the like.

Therefore, I always approach these long- term projections with a degree of caution at this stage.

But I mean, you can't argue with anything. I mean, if they are announcing this during Investor Day , then this is probably the minimum that the company can achieve in the future.

My test trade was taking an upward position, given the percentage of implied volatility, which was around 21%. I looked at something from the Calendar Spread contract family, in this case, Digonal.

I looked at the expected movement, so I went to October 23rd, bought a call option at 285, and then moved to October 16th. So, over the course of one week, I sold the call option at 305.

That's a move of about $20 between now and... well, next Friday, October 9th. That Qatari option was trading at around $9.05, just over $9 exactly. This is a diagonal option with a range of $20, Tom.

We're looking for an upward move, with a risk-limited amount paid, but Tom, this isn't a two-week deal. This is a one-week deal. I was looking for a more economically viable way to do this because these bonuses are n't small, you know.

So, I'm looking forward to a move of about $20 at a cost of approximately $9, Tom.

Yes , let's take a look at this. In the weekly October 23 options. So , you basically have 16 days until the expiry date. Kevin buys a call option at an execution price of 285, which is slightly outside the price range.

Then, in the near term, the October 16 monthly options expire in 9 days, with the call option selling at an execution price of 305. So, this trading example is a bullish diagonal option with a range of $20 to the upside.

With a range of $20, you pay $9.05. You are paying less than half the value of this bullish Qatari option . But, you need an upward move because you are buying a call option at 285, which is still outside the price range, isn't it?

With expectations saying, "Hey, look at the risk profile here." You need the price to reach or approach 305 to achieve the maximum possible profitability in this deal. However, you will need a move above perhaps 289 or 290 to start making profits from this trade.

Now, because you're only paying $9.05, that's your risk: $905 per spread. Since you are paying less than half the value of this range, any price above approximately 290 will be profitable.

Now, it's slightly below the buy option at 305, but that's relatively short-term, isn't it? You have two and a half weeks at this center. As you approach expiry within the next nine days, you can rotate or modify that short option to an October 16 or October 23 cycle .

The idea here is to accumulate some credits that will reduce your risk and also increase potential profitability.

So, what is it that you don't want to happen in this type of center? Well, you don't want it to stay here or go down, do you? You want the stock to start moving and gradually rising, to surpass the 290 barrier to enter the profitability range, but it is an inexpensive deal for an upward range with a $25 and $20 spread for the "Call Diagonal" model proposed by Kevin.

There is little discrepancy between what you buy and what you sell with respect to implied volatility levels, which reduces the entry price, but you definitely need an upward move.

You also have allocation risks in this short option over the next nine days , so keep that in mind.

Kevin, I've taken a more passive approach, and I haven't really focused on a particular direction. I think we always talk about ups and downs. I chose to remain neutral in this deal, Kevin.

I am looking forward to perhaps some consistency, but with giving myself a wide range. I looked at a short-term "Iron Condor" deal. We sometimes call it a short "Iron Butterfly" because I sold a call option and a put option at the same strike price.

But let 's analyze this deal. The October options expire on the 16th of the month, i.e., in 9 days. I sold a call option at a strike price of 285 and I sold a put option at a strike price of 285.

So, I sold a straddle at a strike price of 285, then I bought an out-of-range call option at 305 and I bought an out-of-range put option at 265. So, this is basically a $20 straddle trade.

It is a neutral and short "Iron Butterfly" here.

You will receive a credit balance. Kevin, was trading at 14.30, and is still at that level. You are accumulating a credit balance of $14.30. That's your potential profitability, is n't it?

$1430 per "spread". But this means you have a risk of about $570. Where does that risk come from? It comes below the breakeven points of $270.70 on the downside and $299.30 on the upside.

Those are my breakout points, are n't they? Anything above 305 and anything below 265 represents the maximum loss in this type of trade, how come? But this deal is relatively neutral.

I have tilted it towards the execution price of 285, so it is about $4 higher than the current share price.

But Kevin, you're just looking for some consistency in this deal, aren't you? Selling a straddle at 285, buying a call option with a $20 spread , and buying a put option with a $20 spread, creates these two short columns on both sides.

Whatever you collect, you seek to repurchase it at the cheapest possible price. The risk lies in the difference between the $20 in either direction and the $14.30 you have accumulated.

So, be careful because you will have to cover part of this deal. One of these two options, either the buy or sell option at 285, will be within the profit range at expiry. So, this is a position you have to defend, but the risk is balanced by the profits you make.

As I said, you are trying to repurchase it at the cheapest possible price. You are looking for something to stay around the 285 level.

Yes, you give yourself a little room to go up, but by selling the straddle contract and buying the ends to create a $20 vertical call option contract and a $20 vertical put option contract.

You're trying to repurchase it for the cheapest price possible, Tom.

Yes, that's a good point, Kevin, because you will face some execution risk in the sell position, whether it's the 285 buy option or the 285 put option in this trade .