Is Marvell Stock a Buy After It Joins the S&P 500?
Written by Geoffrey Seiler for The Motley Fool -> Marvell has a big opportunity in optical interconnects. However, the stock is pricey, and its custom chip business has some questions around it. Inclusion in the S&P 500 (SNPINDEX: ^GSPC) is a big deal for a stock. It helps val
However, the stock is pricey, and its custom chip business has some questions around it.
Inclusion in the S&P 500 (SNPINDEX: ^GSPC) is a big deal for a stock. It helps validate a company's success, and the stock typically gets an immediate boost, as funds that track the index are forced to purchase shares.
Marvell Technology (NASDAQ: MRVL) will become one of the newest members of the index later this month, along with electronic manufacturing services provider Flex . These companies will be replacing soup maker Campbell's and swimming pool supplier Pool Corp .
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With Marvell about to enter the S&P, let's see if now is a good time to buy the semiconductor stock .
Marvell shares have been on a tear this year, tripling even after a pullback. The name got a lot of attention earlier this month when Nvidia CEO Jensen Huang called it the next trillion-dollar company, sending its shares up more than 32% in a single day.
The excitement about Marvell largely stems from its connectivity business, where it is a leader in optical interconnects. Data centers have long been connected with copper wires, but as artificial intelligence (AI) chip clusters grow and servers become more complex, copper wires can't keep up with the required speed. Copper wire also becomes too bulky and generates too much heat.
The solution is optical interconnects, which let high-bandwidth data transfer over longer distances with lower latency and less power consumption.
