Markets
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Luke Kawa

Marvell Technology boosts sales guidance for this year and the next (again)

Marvell Technology gave back most of its big knee-jerk gains after the custom chip and networking company released results in line with estimates while continuing to offer an increasingly optimistic view on future sales.

Shares peaked during the conference call as management formalized Marvell’s sales outlook.

The company lifted its revenue guidance for this fiscal year to $11.5 billion, up $500 million from the outlook delivered last quarter. The following year, Marvell anticipates sales of $16.5 billion, a $1.5 billion boost in the view versus three months ago. That fiscal 2028 guidance is well ahead of Wall Street’s call for $15.3 billion.

“We are seeing exceptional AI-related bookings, and as a result, we are significantly raising Marvell’s revenue outlook for both fiscal 2027 and fiscal 2028 compared with the guidance we provided last quarter,” said Chairman and CEO Matt Murphy in the press release, attributing this to “strong demand across a broad set of Marvell solutions.”

Taking a step back, here were the key numbers for Marvell’s opening quarter in fiscal 2027:

  • Net revenue: $2.42 billion (estimate: $2.41 billion, guidance for $2.4 billion plus or minus 5%).

  • Adjusted net income per share: $0.80 (estimate: $0.80, guidance for $0.79 plus or minus $0.05).

For the current quarter, management expects sales between $2.57 billion and $2.84 billion, the midpoint of which is higher than the $2.61 billion consensus estimate. The outlook for adjusted net income per share is $0.93, plus or minus $0.05, which is above the $0.90 call from the Street.

It’s déjà vu all over again. Marvell had set a high bar for itself coming into this report. The stock surged even after its Q4 results came in broadly in line with estimates in early March, as management issued rosy Q1 guidance and an upgrade to their sales forecast through 2027 (its fiscal 2028).

That bar is just getting even higher. To borrow a line from Creative Strategies CEO and Principal Analyst Ben Bajarin, “All viable compute will be used.”

That sentiment is the loose reason why the stock has more than doubled year to date heading into this release, riding the wave of heavy demand for both compute and connectivity solutions.

Marvell already counts Microsoft and Amazon as major customers (and is reportedly in talks with Google about custom chips). At the end of March, the company got the Jensen Huang seal of approval, receiving a $2 billion investment from Nvidia as part of a partnership to ensure custom chips work seamlessly within Nvidia’s data center architecture.

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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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