If You're a Marvell Shareholder... Get Ready! $MRVL

Marvel shareholders are on an absolutely wild ride right now. The stock is up 245% since Nvidia invested $2 billion into the company. Then Jensen Huang, the CEO of Nvidia, the most powerful man in tech, some would say, stood on stage and called Marvel the next trillion company. And the stock jumped another 65% on that one sentence alone. Wall Street is calling it the next Nvidia, but something's happening underneath this rally that every Marvel shareholder needs to understand. And today, I'm going to lay out both sides completely, the bullcase and the bare case. And then we're going to run the numbers and find out what Marvel is actually worth based on my own personal assumptions. Now, before we get into the bullcase, the bare case, and what the stock is worth according to me, let's make sure we all understand what Marvel actually does. because a lot of people are buying this stock right now and they have no idea what the company does and what they own as shareholders. Marvel very simply is an American chip company. But here's the important part. They don't make the famous AI chips like Nvidia does. Marvel makes the technology that connects all those chips together. Let me explain why that matters with a very simple picture. Imagine a giant AI data center as a massive city full of workers. Nvidia makes the workers, the powerful brains that do the thinking. But a city full of workers is useless if they cannot talk to each other. You need roads, phone lines, and messengers running between them so they can work as one team. That's what Marvel builds. They make those connections, the super fast roads that let thousands of AI chips talk to each other instantly. So, as AI gets bigger, the number of chips that need to talk to each other absolutely explodes. And that makes Marvel's connection technology more and more important. Marvel also designed something called custom silicon. In plain English, that means when a giant company like Amazon or Google wants to build its own special AI chip, instead of buying Nvidia's, they need to hire Marvel to design it. That's a huge and growing business. So, let me show you the headlines that have sent the stock to the moon because they are remarkable. First, Nvidia, the most valuable company on Earth, as I said earlier, put $2 billion directly into Marvel early this year. When the king of AI backs you with that kind of money, the whole market pays attention. And since that investment, the stock is up over 200%. Second, as I mentioned at the open, Jensen Huang stood on stage at the major tech conference and said, and I'm quoting the reports here, this is the next trillion company. Marvel is worth around $235 billion today. To hit a trillion dollars, it would need a roughly 4x from here. That is the dream Wall Street is now chasing. Third, Marvel is joining the S&P 500, the most important stock index in America. the stock jumped over 7% on that news alone because when a company joins the S&P, all these big index funds and mutual funds are required to buy it, which creates demand. And so when companies like these, these big ETFs and mutual fund companies are buying the stock, what happens to the price? It tends to go up. A few years ago, Nvidia was a respected chip company, but nothing like the giant it is today. Then AI exploded. And because Nvidia made the exact product the whole world suddenly needed, its revenue and profits went through the roof and the stock followed. Investors are now asking, could Marvel follow that same path? It supplies critical AI infrastructure. It has the backing of Nvidia itself and the market it serves is growing extremely fast. That's the entire bull dream in one sentence. The job of this video is to figure out whether the price you pay actually makes that dream a good investment. Now guys, I want to remind you if you've watched our video, I will always tell you, do not take our titles literally. We use them as a hooked to get you into the video to teach you a bigger lesson. Okay, so let's get into the bull cases. And I want to give you the best version because if you're going to own the stock, you need to understand exactly what the people that are currently buying it see. There are three big reasons why Wall Street's going crazy for Marvel. Bull case number one, custom AI chips are the next giant wave. A rising tide raises all ships. Right now, the biggest companies in the world, Amazon Microsoft Google Meta OpenAI they're tired of paying enormous prices for Nvidia's chips. So, they want to build their own custom AI chips and they need a partner who knows how to design them. Marvel is one of only two companies on the planet that dominates this work. The bulls say that as these tech giants build more and more of their own chips, Marvel's business could explode. Marvel itself has said its custom chip business could pass 10 billion in revenue by 2029. If that happens, Marvel is a totally different company. Well, case number two, Marvel could become the next Broadcom. Right now, there's a company called Broadcom that dominates this custom AI silicon space, and it's worth far more than Marvel today. The bulls are saying, "What if Marvel becomes Broadcom number two? What if it captures a big chunk of this market while the whole market is growing rapidly?" If that happens, Marvel's revenue and profits could grow much faster than investors expect today. And the financials are already very strong. Marvel did 8.72 billion in revenue over the past year with a record recent quarter of 2.418 billion, up 28% from the same quarter a year ago. Management guided that next quarter will be 2.7 billion which is about 35% growth over the same quarter last year and they also said growth should continue to accelerate. Bull case number three connectivity is the bottleneck of the entire AI buildout. Here is something that people don't understand. As AI gets bigger, the problem is no longer just raw computing power. The problem is moving data fast enough between all of those chips. Jensen Huang himself explained that the thing that makes a giant AI data center actually work is the connectivity and that's exactly what Marvel builds. Marvel's also investing heavily in something called Silicon Photonix which uses light instead of electricity to move data even faster. They recently acquired a company called Celestial AI to push deeper into this optical technology. Because when you connect thousands of chips with regular copper wires, you eventually hit a physical limit. Light does not have that limit. If data movement becomes the most valuable part of AI, Marvel is positioning itself right at the center of it. And one more thing the bulls point to, this is not a company with no profits. Over the past year, Marvel made 2.53 billion in net income and generated 1.67 billion in free cash flow with gross margins. That's margins on every extra unit they sell above 50%. That is real. That is a profitable business underneath all of the hype. Now, before I get into the bare case on Marvel, I want to stop for a second because this is exactly why being in our community matters. On our main YouTube channel and our plus channel combined, we have analyzed over 50 stocks every single month. That's a lot. I know that. But inside our community at everythingmoney.com, members have analyzed over 4500 stocks just this year alone. And here's why that matters to you. Whether you're brand new to investing or you've been doing this for years, our community members saw the value in Intel before it moved. They saw the value in Micron before it moved. That's what you get when you're in a room with us every single day. And it's not just the community doing the work together. Every single week, we release two to three brand new exclusive analysis videos, stocks that our community members are actually requesting. It's the in-depth stuff that you're not going to find on YouTube. And on top of that, you get access to our stock analyzer tool. You put in your own assumptions and it tells you exactly what price you should pay for the stock based on what you put in. Not guessing what somebody else wrote, not emotions, just the numbers that you have decided. So, when I tell you you're about to break down whether Marvel is a deal or not, just know that's a small slice of what's happening inside the community right now. So, if you want to see what stocks our members are analyzing before they ever hit the news, the link is in the description, so go check it out. Now, let's get into the bare cases because underneath this incredible rally, there are some warning signs that almost nobody cheering the stock is talking about. Bearcase number one, Broadcom is not Marvel's partner. It's the giant trying to crush it. This is the biggest one. While everyone is excited about Marvel, Broadcom is actually dominating the same space and the gap is widening into a canyon. Broadcom has locked up the biggest AI customers, Meta, Google, and Open AI with multi-year deals running through 2028. Broadcom is guiding to around 56 billion in AI revenue. And it's so powerful that it even helping to finance the building of entire data centers. Marvel may not have the size or the balance sheet to compete with that kind of machine. If Broadcam keeps locking up the only customers that matter, the Bears say that Marvel could be left fighting for scraps. Bear case number two, Marvel is heavily dependent on AI spending, staying skyhigh. And the company absolutely admits that. This is not me guessing. In Marvel's own official filing with the government, they flag this risk very clearly. They say the current level of AI infrastructure spending may not be sustainable over the long term and that a significant reduction in AI related spending would likely harm their financial results. They even warn that their customers might slow down or move their spending elsewhere, which would reduce demand for Marvel's products. So, let me put that in plain English. Right now, the giant tech companies are spending massive amounts of money building AI data centers. That spending is what's fueling Marvel. But spending like this does not go up forever. At some point, these companies slow down or they decide to make better use of what they already built or they shift their budgets to other things. If that happens, if AI spending just goes back to normal, Marvel's growth slows and the stock price could fall very hard. Bare case number three, Marvel depends on a tiny handful of customers. This one should really make you stop and think. In their own filing, Marvel disclosed that just two customers each made up 10% or more of their entire revenue. And their top 10 customers together made up 82% of everything they sell. Let me explain why that's dangerous. When almost all of your money comes from just a few giant customers, you're extremely exposed to their decisions. If just one of those big customers delays a project, decides to design its own chips in-house, shifts its order to Broadcom, or changes its technologies, Marvel's revenue could change very quickly and very painfully. You're not in control of your own future when a handful of customers and companies hold that much power over your business. So, who's right, the bulls or the bears? Well, guys, we don't know. We're going to use our process. We're going to look at the eight pillars. We're going to look at analyst estimates. Then we're going to use our stock analyzer tool to make reasonable assumptions about Marvel's future, factoring in those bull and bare cases to determine the right price to pay today based on our assumptions. Now guys, I've made an absolutely easy cheat sheet that includes my bull cases, my bare cases, my analysis I've made here on the video, and all of my stock analyzer assumptions. If you want that absolutely free cheat sheet, click the link in the description below or our first pin comment, and we will email it to you immediately. So guys, as we're recording this video, the stock is up 13%. In the last week, it's up 36%. In the last month, it's up 75%. Last three months, it's up 222%. For anyone who thinks this is normal, it's probably going to be a rude awakening at some point. When? I have no idea. But back to Marvel, the price of the company is $267 billion. Yes, the share price is whatever it is, but all that is is taking the market cap and dividing by the number of shares. Now the other thing I look at is enterprise value guys. Our market cap is 267. Our enterprise value is 272. What that means enterprise value is if you want to buy the entire company with no debt, pay off all the debt using the cash. Essentially they have $5 billion in debt. Last year they made 1.66 billion in free cash flow. The last 5year average is 1.21. I'm not going to lie guys, this is not very impressive to me. I look at this going, "Oh, I would have thought like it would be five or 10x." Let me give you an example. Let's go look at Nvidia. Look at Nvidia's 5year versus one-year free cash flow. 120 billion versus 49 billion. And if you actually go back five years on Nvidia, look at their free cash flow 5 years ago. It was 3.8 billion or 8 billion. Now they did 120 billion. We're not seeing the same thing for Marvel. So, when I look at this, I think to myself, okay, yeah, it's got a lot of potential, and the revenue is up a lot, but it's not as big a difference between the one-year and 5year free cash flow numbers. We've got pretty crappy returns on capital. 0% over the last 5 years, 3 and a half% last year. We've got, look at the profit margin difference. 4.5% a year for the last 10 years, 1.24 for the last five, 29% last year. Keep in mind, if the 10ear is 4.4 before and last year was 2.9. That means the last before this last previous year the 10ear number was like two or 1.5%. So I'm already a little apprehensive here. Good thing is a lot of organic growth without much in acquisitions. So we're seeing double digit revenue growth every year, but it not really translated to profit over the last 5 and 10 years, which is kind of surprising to me. They pay a dividend, which is adorable. Let's look at the eight pillars here. O the only things that are check marks are cash flow growth, revenue growth, net income growth. I mean guys, 220 times 5year free cash flow. Usually on these fast growing companies, I say ignore this, but it's not like it's growing fast. The free cash flow is not growing here. The debt is low because it's based on a 5-year number, not the one year. The debt is I mean an X. Their shares are up. Guys, I'm not as impressed with this as I thought I was going to be. Let's go see what analysts think about this company. Oh my god, look how far out they have analysts going. Holy cow. $2.90 per share growing to $152 per share in the next nine years. That's 5x in the next 10 years. 9 years. That's a big growth level. All right, let's go to revenue growth assumptions. 8.35 billion to 33.4 billion. 4x in the next 10 years. A lot of growth there. I I mean $15 per share. Let's look at it this way. If they did $15 per share in 2034 and you assign them a 22 PE, guys, that's $330 per share. Their current price is $300 per share. So 10% upside for the next 10 years, that's less than 1% annualized. So guys, I'm not like blown away here. Now granted, analysts are wrong all the time and this could be much greater, but how much greater does it be to be able to make an outside outsiz return? Now guys, I threw a lot of numbers at you. If you're overwhelmed, you're not alone. We're we're here to simplify all of this. That is exactly why I teach on YouTube because I realize that understanding about companies and investing is not that complicated. We try to keep it as simple as possible. And next, I'm going to go through my assumptions about the future and the price I'd be willing to pay for this stock. So, let's go to stock analyzer. Now, I did a 10-year analysis before, guys. This 10-year analysis I did, I did 8, 12, and 16% revenue growth. Profit margin, I did 15, 20, and 25%. The good news is their free cash flow has been very consistently very high. It appears a lot higher than their profit margin. So 15, 20, and 25. But keep in mind, guys, they've never had this number in any of these in any of these results here. So I look at it going, okay, am I making too high of assumptions here? Now, what PE and price of free cash flow would I put 10 years from now? So, the market average is 15 or 16. You go higher for good companies, lower for bad companies. What makes a company good? High returns on capital. The moat we tal about that's overused and a lot of growth potential. I put 13, 16, and 19. You know what? I'm going to change this to 13, 18, and 23 because I do think that it deserves higher than the market, but only if they're able to hit these numbers. So, I'm okay assigning that. But guys, it's not a guarantee. We don't know what's going to happen here. Then finally, what is my desired return? Well, guys, for videos, I always put in 9%. That's to say, what is the intrinsic value? There's no margin of safety here. What is the company worth? Now, keep in mind, I don't recommend to buy any company for a 9% return. Whether you do it or not is up to you. But for me, I want a much higher return. Why do I not put my return in here? Because guys, your return requirement might be 20%, might be 12%. It's all based on your personal situation. So, right here, I just want to say what is the company worth? So, I hit the analyze button, scroll down, guys. I have a low price of 30, high price of 135, middle price of 66. Which means if my middle assumptions occur, I can look at a discounted cash flow over the next 10 years of a negative 7.85%. So guys, I'm looking at this and thinking 12% revenue growth that could be low, but let's go up to the top here and just change this to 12, 16, and 20%. I'm increasing that growth rate from 12 to 16%. That's a 33% increase. And look, I still have negative numbers here. This is hard for me to get my head around. And for me, it's just it's a pass for me. Doesn't mean it should be for you. You might not know something better about the company or the business and the industry that I don't know. More power to you because remember, what's most important is understanding what you're buying. And if I can't understand it, I should avoid it. But it doesn't mean you shouldn't. Now guys, there is one more stock that you need to see. It's a company that has been beaten down and overlooked, but I think it could be the next Intel, a turnaround that rewards patient investors who buy at the right price. Michael Bur actually announced a position in the most recent quarter as well. So, click this video right here to watch our full breakdown, an indepth analysis on a high quality company. Thank you for your time.