Shares of Marvell Technology (MRVL) have gained more than 50% following bullish comments from Nvidia CEO Jensen Huang.
In premarket trading, MRVL rose another 13% to $328.85. During his keynote speech at the Computex conference in Taiwan, Huang stated that Marvell could become "the next trillion-dollar company."
In March, Nvidia also announced an investment in Marvell Technology as part of a partnership that will allow customers to leverage solutions from both companies to develop custom AI infrastructure.
Is MRVL due for a pullback?
With volatility in MRVL surging, the stock has become a perfect storm for intraday traders. Shares have risen for four consecutive trading sessions on elevated volume, while the RSI (14) remains in overbought territory and the stock is trading more than 225% above its 200-day simple moving average (SMA). Such an extended setup leaves the stock vulnerable to intraday profit-taking, especially if early momentum fadesFollowing the market open, MRVL could see another strong upward move, increasing the likelihood of a pullback during the second half of the trading session. Since the stock trading in price-discovery territory, traders may look to the psychological $300 level as the first key reference point.
It is also worth noting that opening short positions while a stock is printing new all-time highs is extremely risky. Strict risk and money management remain essential.
The dangers of market euphoria
The semiconductor sector is increasingly raising concerns about the possibility of a speculative bubble similar to the dot-com era. So far, AI has not generated enough revenue to fully justify the rapidly growing level of corporate spending.Another risk factor is the high concentration of capital in AI-related stocks. Any signs of slowing demand for AI infrastructure or weaker-than-expected guidance from industry leaders could trigger broad profit-taking across the sector.
For Marvell Technology, an additional concern is that a significant portion of the recent rally has been driven by investor expectations and Nvidia-related optimism rather than the company's financial performance.
Marvell's latest quarterly report exceeded analyst revenue estimates by only 0.49% ($2.42 billion versus the consensus forecast of $2.41 billion), suggesting that the company's market capitalization is currently growing much faster than its underlying business fundamentals.
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