Prediction: Not Micron. This Artificial Intelligence (AI) Stock Could Be the Biggest Winner of the Next Infrastructure Bottleneck

Harsh Chauhan, The Motley FoolMon, August 24, 2026 at 10:01 PM UTC

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Key Points -

Marvell Technology is a key player in the optical networking space with a healthy market share.

The company is anticipated to deliver terrific earnings growth, but it can exceed expectations.

Marvell stock can soar impressively over the next three years, which is why investors can consider buying it before it jumps higher.

10 stocks we like better than Marvell Technology ›

Memory chip demand has been exceeding supply thanks to artificial intelligence (AI) data centers, and that's not surprising, as memory helps solve a key bottleneck that can impede the performance of AI data center chips.

AI accelerators, such as graphics cards, server processors, and custom chips, are known for their fast processing speeds. As a result, they require quick access to huge amounts of data, and that's made possible by integrating fast memory chips into AI accelerators. This is why Micron Technology has been experiencing phenomenal growth in demand for its high-bandwidth memory (HBM).

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The good news for Micron investors is that memory demand is expected to outstrip supply until the end of the decade. Citrini Research, a firm that provides insights on equity trading and macro trading, predicts that dynamic random-access memory (DRAM) demand could exceed supply by 25% in 2030. Micron stock, therefore, is likely to continue benefiting from an inflated memory pricing environment that could send its stock higher.

However, there is another emerging bottleneck within the AI infrastructure space that could be even bigger than memory chips -- optical networking. Marvell Technology(NASDAQ:MRVL) is one of the best ways to capitalize on this boom. Let's look at the reasons why.

Image source: Getty Images.

Marvell Technology is the dominant player in a fast-growing optical niche

Goldman Sachs estimates that the optical networking market could grow from $15 billion this year to $154 billion in 2028. That's a massive increase of over 10x in just two years. This stunning growth will be fueled by the need for rapid connectivity within AI data center clusters, creating demand for high-speed optical networks and Ethernet.

Specifically, the data center optical interconnect (DCI) market alone could clock a 48% annual growth rate between 2024 and 2030, according to China Insights Consultancy. The firm estimates that the DCI market size could grow from less than $14 billion in 2024 to over $144 billion in 2030.

Marvell is in a terrific position to capitalize on this market's growth. It reportedly controls 60% to 65% of the optical digital signal processor space. Not surprisingly, the company is experiencing robust growth in sales of its optical networking products. Marvell noted in May that its data center interconnect business is on track to grow by more than 70% in fiscal 2027, exceeding its original estimate of 50% growth.

The company projects that its DCI module revenue will reach $1 billion in annualized revenue in fiscal 2028, double fiscal 2026 levels. Also, the Ethernet switching business is growing at a solid clip, with revenue expected to double in fiscal 2027 to $600 million. Marvell estimates that the Ethernet switching business could exceed $1 billion in annualized revenue in fiscal 2028.

Marvell, therefore, is growing faster than the optical networking market. Importantly, the significant growth opportunity in this market suggests that Marvell can sustain its impressive growth over the long run. Consensus estimates are projecting Marvell's revenue to double in just two fiscal years, and don't be surprised to see it keep growing at a healthy pace for a longer period.

MRVL Revenue Estimates for Current Fiscal Year data by YCharts

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Is the stock a buy now?

Marvell stock has shot up 165% so far in 2026. This explains its expensive price-to-earnings (P/E) ratio of 81. The forward earnings multiple of 58, though expensive, points toward a solid increase in the company's bottom line.

Consensus estimates project a 43% increase in Marvell's earnings per share this year to $4.05. Importantly, its earnings growth is poised to accelerate.

MRVL EPS Estimates for Current Fiscal Year data by YCharts

This potential acceleration justifies this semiconductor stock's expensive multiples. The iShares Semiconductor ETF, an exchange-traded fund that tracks the semiconductor sector, has a P/E ratio of 64. So, it can be considered that Marvell's forward earnings multiple is almost in line with the broader index.

Assuming Marvell trades at even 45 times earnings after three fiscal years and its earnings per share jump to $9.45, as seen in the chart above, its stock price could reach $425. That's a potential jump of 80% over Marvell's current stock price. However, this AI stock could deliver greater gains if its earnings growth outpaces market expectations, driven by exponential growth in optical networking.

So, investors looking to capitalize on the next big AI bottleneck will do well to buy Marvell Technology stock before it soars higher.

Should you buy stock in Marvell Technology right now?

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Marvell Technology, Micron Technology, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.

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