What Happened:

Shares of networking chips designer Marvell Technology (NASDAQ: MRVL) fell 5.73% in the morning session after the company reported second quarter revenue that was in line with analysts' expectations. Its inventory levels also improved and its EPS outperformed Wall Street's estimates. On the other hand, its free cash flow fell short of estimates and its gross and operating margins declined. Overall, this was a mixed quarter for Marvell Technology, and the market was likely hoping for more.

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What is the market telling us:

Marvell Technology's shares are very volatile and over the last year have had 27 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was three months ago, when the company gained 18.9% on the news that the company reported first quarter results that beat analysts' revenue and earnings per share (EPS) estimates. Inventory levels also improved. 

On the other hand, it was less good to see deterioration in gross and operating margin. Regardless, guidance for the next quarter was slightly ahead for both revenue and EPS. Additionally, management provided bullish comments on the rest of the year, stating that "we are expecting revenue growth to accelerate in the second half of this fiscal year, accompanied by gross and operating margin expansion" and arguing that AI is a tailwind for the company. 

Overall, it was a mixed quarter, but the outlook and accompanying commentary were bright spots.

Marvell Technology is up 48% since the beginning of the year, but at $53.27 per share it is still trading 19.2% below its 52-week high of $65.93 from July 2023. Investors who bought $1,000 worth of Marvell Technology's shares five years ago would now be looking at an investment worth $2,600.

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