Citi maintains a "Buy" rating on Marvell Technology (MRVL.US) with a target price of $91, highlighting confidence in the company's upward revision of its artificial intelligence (AI) sales targets.

Analysts, led by Atif Malik, note that due to strong growth in custom application-specific integrated circuits (ASICs) and continued robust demand for 800G optical modules, they anticipate an upward revision in market expectations for Marvell Technology in the second half of 2024. Fundamentally, they continue to believe that only two companies have the technical expertise required to design cutting-edge custom ASIC chips, with Marvell Technology being one of them.

The analysts express that the management is confident in both short-term and long-term custom ASIC opportunities with three hyperscale customers, A, B, and C, which will drive the total AI sales target to $1.5 billion/$2.5 billion for fiscal years 2025/2026.

Analysts believe that Marvell Technology may see strong growth in Trainium2 chip sales this year and note that Amazon's (AMZN.US) AWS CEO, Matt Garman, is excited about the launch of the new training chip and the expansion of AWS AI/ML workloads/capacity at recent conferences.

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Malik and his team think that Google's (GOOGL.US) Arm CPU capacity increment this year may be minimal, but if the hyperscale company decides to extend the project to general-purpose processors, the increment could be significant next year.

Analysts say that Microsoft (MSFT.US) remains the biggest opportunity in 2026, and they believe Marvell Technology is also well-positioned to benefit from new custom ASIC projects from Open AI and Oracle (ORCL.US) in the future.

Marvell Technology believes that its non-AI enterprise networking and operator infrastructure business has bottomed out after shipments in the first half of 2024 were below terminal demand, with the company expecting a recovery in the second half. However, analysts note that the time for non-AI sales to reach a normal sales level of about $2 billion remains to be seen.

Due to strong growth in custom ASIC and 800G optical module demand, analysts expect Marvell Technology's revenue to show stronger sequential growth in the fourth quarter.

Overall, Citi analysts say that due to the continued growth of AI optical devices, tiered sales of custom ASIC AI projects, and a bottoming out in non-cloud markets such as enterprise networking and operators, they rate Marvell Technology as a "Buy".