Markets
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Luke Kawa

Marvell Technology soars after CEO targets $10 billion in revenues next year

Despite Marvell Technology initially falling in after-hours trading after the chip company posted Q3 results modestly ahead of estimates and Q4 guidance in line with expectations, it’s now turned those losses into massive gains thanks to positive commentary on next year’s sales outlook. Shares are up almost 10% as of 5:20 a.m. ET.

On the earnings call, CEO Matt Murphy said that sales could eclipse $10 billion in its upcoming fiscal year, while analysts had penciled in a forecast below $9.5 billion.

That solid anticipated pick-up in sales is being driven by Marvell’s custom chip division, where Murphy touted recent customer wins including an “emerging hyperscaler.”

“We expect our custom business, roughly a quarter of our overall data center revenue, to grow by at least 20% next year,” he said.

While custom chips sales have been a relatively lumpy line item for Marvell, Murphy doesn’t think that will be the case going forward, saying that there won’t be any more “air pockets.”

The Q3 results:

  • Net revenue: $2.075 billion (compared to estimates for $2.06 billion)

  • Adjusted earnings per share: $0.76 (estimate: $0.74)

For Q4, management offered guidance for net revenues to come in at $2.2 billion (plus or minus 5%) with adjusted EPS of $0.79 (plus or minus $0.05). That’s virtually bang in line with Wall Street’s call for $2.19 billion and $0.79, respectively.

Along with these results, Marvell announced plans to buy Celestial AI, a company that uses light to move data between chips, for at least $3.25 billion in cash and stock. The purchase price could go up by as much as $2.25 billion if Celestial’s cumulative revenues reach at least $2 billion by the end of Marvell’s fiscal 2029 (roughly speaking, calendar year 2028).

The chip stock has been on a solid run recently, thanks in large part to a wave of investor enthusiasm over custom chips spurred by the launch of Google’s Gemini 3. Marvell works with Amazon as a codesigning partner for its custom chips, including providing connectivity infrastructure for the Trainium3 model, which was publicly launched on Tuesday.

That being said, Marvell has been one of the worst chip stocks this year, and is still down around 7.5% for the year so far.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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