Marvell Technology’s MRVL shares have plunged 30.4% in the past three months, underperforming the Zacks Electronics - Semiconductors industry and its peers, including Broadcom AVGO, Qualcomm QCOM and Ambarella AMBA. While Broadcom shares have returned 32.7%, shares of Qualcomm and Ambarella have lost 5.1% and 4%, respectively, in the same time frame.

This steep decline in the share price of this semiconductor leader raises the question: Should investors hold on or exit the stock to minimize losses?

Image Source: Zacks Investment Research

Fears of rising trade tensions and slowing economic growth have put pressure on the entire technology sector, prompting widespread sell-offs in tech stocks.

The U.S. government’s recent stance toward China has also been a matter of concern for Marvell Technology, as the company generates significant revenues (about 43% of its fiscal 2025 total revenues) from the Chinese market.

Additionally, as Marvell Technology owns research and development facilities in China and outsources there, the growing geopolitical tension, fear of fresh sanctions and persistent tariff threats have added to investors’ skepticism.

Weakness in MRVL’s consumer end market due to volatility in gaming demand and lumpy order patterns in industrial business has added to investor concerns. Furthermore, Marvell Technology’s custom AI silicon, including XPUs, which are driving its revenue growth, is lowering MRVL’s gross margins due to higher costs associated with manufacturing these chips. However, not everything is gloom and doom for MRVL stock.

Marvell Technology is gaining from hyperscalers’ increasing reliance on custom silicon for AI workloads. The data center segment, which is also Marvell Technology’s largest segment, is benefiting from solid momentum in electro-optics products, custom AI silicon and next-generation switch divisions.

As AI workloads gain momentum, data centers are expected to require improved networking and interconnect solutions. Marvell Technology can seize this opportunity and capitalize on this shift with its advanced optical interconnects, including 800G PAM, 400ZR DCI, and its industry-first 1.6T PAM digital signal processor.

Additionally, the transition from copper to optical connectivity in AI infrastructure represents a massive growth opportunity for Marvell Technology’s Co-Packaged Optics technology. Additionally, as Marvell Technology’s enterprise networking and carrier infrastructure segments are now returning to normalcy on the back of demand recovery.