(Reuters) - Shares of Marvell Technology soared about 23% on Friday after the chipmaker became the latest to project a big surge in revenue from the AI boom, days after larger peer Nvidia Corp signaled the huge potential for the technology.
The gains were set to add nearly $10 billion to Marvell's market value as investors chase exposure to AI to counter weakness in many technology companies' traditional services and products.
"Generative AI is rapidly driving new applications and changing the investment priorities for our cloud customers," said Marvell CEO Matt Murphy on the post-earnings call, referring to one of the company's largest segments.
Given the speed at which AI infrastructure is advancing, the technology refresh rate is happening at 18 to 24 months compared to four-plus years in standard infrastructure, he said.
The company on Thursday forecast sales from AI-based offerings to double this year.
Nvidia on Wednesday projected second-quarter revenue more than 50% above the average Wall Street estimate and said it would have more supply of AI chips in the second half of the year, sending its shares up 24% on Thursday.
At least 17 brokerages raised their price targets on Marvell, taking the median price target to $65, implying a 31% upside to the stock's last close.
"The results/guidance confirms the team is moving past the trough of this downcycle," J.P. Morgan analysts said.
The brokerage expects a demand boost from areas such as 5G, auto and AI-based products to offset weakness in enterprise networking, wired carrier and legacy data centers.
Major cloud computing players Microsoft Corp and Alphabet Inc are adding the latest AI technology to their products in hopes of boosting demand at a time the weak economy has been a drag on their growth.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Sriraj Kalluvila)