A Marvell-ous day for Marvell

Last week, we wrote about how a shoutout from Jensen Huang was enough to propel Marvell’s staggering 32.5% single-day jump.

Now, the semiconductor star is making the case that it’s more than a passing AI-trade fad. The company surged 9.63% today after news broke Friday that it’s being added to the S&P 500 index, a change that will take effect June 22. Manufacturing company Flex will also join the exclusive S&P 500 club, while Pool Corp and The Campbell’s Company are both getting the boot.

Zoom out: The news of Marvell’s inclusion in the index isn’t particularly shocking, given the company has risen 239.9% year to date, boosting its market cap to $230 billion. In its latest earnings report, the company reported reaching a key profitability milestone, making it eligible to be in the index.

Marvell is a chipmaker like Nvidia, Intel, and the rest of the crew, but its real value is in enabling the “digital plumbing” of datacenters: the networking that enables thousands of processors to communicate with each other. That job becomes increasingly important as datacenters grow larger and more complex.

Joining the S&P 500 tends to give share prices a slight pep in their step since index funds have to buy companies’ shares to track them. The PR and prestige don’t hurt, either, and Marvell’s addition is one more sign of how dominant the AI trade has become in the broader market.

Kingvidia’s darling

Jensen Huang wasn’t just calling Marvell the “next trillion-dollar company” to be nice. Nvidia itself agreed to a $2 billion investment in Marvell in March of this year.

But even being hand-plucked as Jensen’s golden goose can’t shield the company from investors’ hot-and-cold feelings about the AI trade: The same day the S&P 500 announced Marvell was joining the index, the stock dropped 17% after its bigger competitor, Broadcom, gave ‘meh’ revenue guidance.

Whether share prices roil in the Nasdaq, the S&P 500, or another index entirely, the volatility of the AI trade stops for nobody. —LB