Nvidia and Marvell Hit by Lowered Projections: Is It Time to Reevaluate?
Nvidia (NASDAQ:NVDA) and Marvell Technology (NASDAQ:MRVL) attracted significant investor attention this past Friday after Citi (NYSE:C) revised down its forecasts for both companies, citing weakening enterprise demand and ongoing tariff uncertainties. Citi’s latest actions have raised concerns about future growth for these prominent chipmakers, highlighting the challenges they face in the evolving market landscape.
Nvidia’s Earnings Projections Reduced: Impact of Slower Cloud Spending and Trade Uncertainty
Citi analyst Atif Malik lowered Nvidia’s earnings projections for 2025 and 2026 by 3% and 6%, respectively, reflecting a broader slowdown in demand. The analyst pointed to reduced cloud spending, particularly from Microsoft (NASDAQ:MSFT), as a key factor weighing on the semiconductor giant’s prospects. Microsoft’s pullback in cloud investments is seen as a direct result of ongoing economic challenges and the heightened uncertainty surrounding the U.S.-China trade standoff.
Further compounding Nvidia’s challenges, Malik revised the company’s GPU unit forecasts downward by 3% for 2025 and 5% for 2026. The analyst acknowledged that Nvidia could attempt to offset rising GPU costs by raising prices, but he warned that such a move might compress profit margins, making it a double-edged sword. Despite the downgrade, Malik maintained a Buy rating on the stock, although he reduced his price target from $160 to $150, signaling cautious optimism about the company’s long-term prospects.
Marvell Technology Also Faces Downgrades Amid Weaker Hyperscaler Demand
Marvell Technology’s outlook has also been revised downward, as Citi reduced its fiscal 2027 revenue and profit projections by 5% and 8%, respectively. The revision reflects weaker-than-expected demand from hyperscalers, a key segment for Marvell. These customers, who operate large-scale data centers and rely on advanced computing chips, have been scaling back their purchases as they navigate a period of economic uncertainty.
In addition, Citi slashed its AI chip estimates for Marvell by 20%, citing concerns that Amazon (NASDAQ:AMZN) may diversify its ASIC (Application-Specific Integrated Circuit) suppliers for future Trainium products. Amazon’s potential move away from exclusive reliance on Marvell for these products could pose a significant risk to the company’s future growth prospects in the AI sector, where demand for high-performance chips is expected to remain strong over the coming years.
Despite the downbeat revisions, Malik reiterated a Buy rating on Marvell’s stock, highlighting the company’s strong position in the broader semiconductor space and its potential for recovery. However, investors are likely to remain cautious as the company navigates a more challenging environment.
Factors Behind Downgrades: The Impact of U.S.-China Trade Tensions and Weakening Enterprise Demand
Both Nvidia and Marvell are grappling with a confluence of macroeconomic factors that have raised concerns about the future trajectory of the tech sector. A primary driver of uncertainty is the U.S.-China trade standoff, which continues to disrupt supply chains, elevate costs, and introduce significant risks for companies operating in both markets. The tariffs imposed by the U.S. on Chinese imports and the countermeasures by China have created a volatile environment for global chipmakers like Nvidia and Marvell.
Furthermore, weakening enterprise demand for high-end chips has compounded the pressure on both companies. With businesses tightening budgets and scaling back on IT infrastructure investments, the demand for cutting-edge semiconductors, which are critical for cloud services, AI, and other enterprise applications, has started to slow. This trend is particularly evident in the recent pullbacks from major hyperscalers like Amazon, Microsoft, and other large tech companies.
Outlook: Navigating Economic and Geopolitical Challenges
Looking ahead, both Nvidia and Marvell will need to adapt to the evolving challenges in the tech and semiconductor sectors. For Nvidia, the key to future growth will be its ability to maintain its dominance in the GPU market while navigating pricing pressures and shifting cloud demand. Similarly, Marvell must prove its resilience in the face of cooling demand from hyperscalers and potential diversification by major customers like Amazon.
As for Citi’s revised forecasts, they serve as a cautionary reminder of the risks inherent in the tech sector, especially for companies heavily reliant on enterprise and cloud demand. While both Nvidia and Marvell are well-established players with strong product portfolios, the impact of geopolitical risks, such as the U.S.-China trade tensions, and the broader economic slowdown could limit their growth potential in the short to medium term.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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