Are Marvell shares just too pricey?

I’m keeping close tabs on Marvell Technology (NASDAQ: MRVL). It shares are up 250% in the last three months, and 338% over one year. As ever, we need to approach with caution.

Marvell designs high-performance silicon chips and networking hardware to power cloud data centres, AI clusters, and 5G networks. It’s a classic ‘picks and shovels’ critical AI infrastructure play.

Inevitably, it’s a gamble on whether AI transforms the global economy, or is a bubble in the making. Marvell is shockingly expensive, with a price-to-earnings (P/E) ratio of 231. But it’s making money, with Q1 revenue jumping 28% to $2.42bn. It must maintain that pace of growth, to justify its P/E. Any slip will be punished.

Marvell has a market cap of $231bn. So it’s far from a trillion-dollar baby yet. On Wednesday (17 June), the Marvell share price hit an all-time high of almost $330, on hopes of a big order from Amazon. But that’s not in the bag. I’m sorely tempted, but this could be a bumpy ride. That’s true across the sector.

Should I buy Ciena stock?

Networking systems and software developer Ciena (NASDAQ: CIEN) is flying even higher. Its shares are up 463% in the last year. Unsurprisingly, they have an even higher P/E of almost 292. However, the forward P/E is just 82, which suggests that earnings should keep barrelling along. At this valuation, they’d better.

Ciena is another AI infrastructure play, as it helps telecom and cloud providers handle the immense traffic surges generated by AI applications. With demand outpacing supply, it has plenty of pricing power.

Q1 revenue jumped 33% year on year to $1.43bn. And it forecasts full-year revenue will climb 28% to $6.1bn, up from 19% last year.

Again, the risk is that it falls short. If it has to raise further capital to fund its expansion, that could dilute existing holdings. Its shares have been volatile in the past. It’s a smaller player than Marvell, with a market cap of $68bn. I’m tempted.

Is Soundhound just too risky?

Soundhound AI (NASDAQ: SOUN) is a relative minnow with a market cap of just $3bn. And in another contrast, its shares have done badly, actually falling 25% in the last year. Is this an opportunity or a threat?

Soundhound is a voice AI specialist. Think Alexa, but its white label product is designed to be customised by other businesses. It attracted a lot of early-stage AI hype, and revenues have been rising strongly, with Q1 figures showing a 52% rise to $44.2m.

There’s a problem though. As nerves jangle, investors want to see profits too. Soundhound is still posting net losses, and Q1’s was bigger than expected. Another danger is that one of the big players will basically eat its lunch. This is high risk, high reward.

All three are worth considering but only by investors who fully understand the risks. Many companies aspire to be the next Nvidia, but they can’t all get there.

Should you invest £5,000 in Marvell Technology right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Marvell Technology made the list?

Harvey Jones owns shares in Nvidia.

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Pushing for a profit

The first one is C3.ai (NYSE:AI). It’s a software company that provides AI and machine learning solutions for enterprise businesses, with a particular focus on large-scale, industrial, and government sectors.

Over the past year, the stock is down 14%. Part of this is because the business remains unprofitable, with a high cash burn rate of tens of millions of dollars per quarter. Although this remains a risk going forward, I’m not overly concerned. The business is growing, as shown by the 29% revenue increase in Q2 results versus the same period last year.

Subscription growth (a key metric for the company) rose by 22% versus last year, indicating to me that it’s only a matter of time before the firm flips to making a profit. Recently, it has been shifting from long-term contracts to a usage-based model (consumption-based pricing), aiming to drive broader adoption. I think this is a good move that bodes well for the future.

Let’s not forget that the AI software market is experiencing rapid growth. The business is well-positioned as a first mover in enterprise AI, especially with its focus on regulated and high-complexity industries. Yet due to the losses, I think many investors have overlooked it and I think this has made it undervalued.

The voice of success

Another option that I think is worth considering is SoundHound AI (NASDAQ:SOUN). It specialises in voice AI and natural language understanding, offering conversational AI solutions for everyone from car companies through to smart devices.

It already has some high-level partnerships, such as with Mastercard and Hyundai, but is currently trading around $11. Even though it’s up 164% over the past year, it’s down 44% in 2025. The sharp drop in Q1 came after Nvidia revealed it had fully exited its investment in the business.

Given it was trading above $20 at the start of the year, I think it’s good value at current levels. The exit from Nvidia doesn’t mean the business has peaked, as it has continued to deliver strong financial results since then.

One risk is the high competition, such as with Siri and Alexa from other large tech companies. Yet despite this, there’s growing demand in this niche part of AI. SoundHound is the go-to specialist in this area, which leads me to think that it could stabilise and eventually rally back to the January highs.

I like both AI stocks and think investors can consider them when it comes to trying to find good value in a space where some shares are overhyped.

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Since 7 February, the share price has gone from $1.71 to $8.24, which translates into a whopping 381% rise.

Is this an artificial intelligence (AI) stock to consider for my own portfolio? Let’s dig in.

Riding Nvidia’s coattails

For those unfamiliar, SoundHound’s tech enables brands to build conversational AI voice assistants.

On 14 February, investors noticed in a regulatory filing that chipmaker Nvidia had a stake in this tiny firm. Like clockwork, they piled in, believing the small-cap stock with AI handily incorporated into its name could be the next big thing.

The share price went up 66% in a single day!

However, it was quickly revealed that Nvidia had held this position for seven years, without actually adding to it. What’s more, these 1.73m shares were worth roughly $11m at the time.

Admittedly, they’re worth a bit more now, but this is still a drop in the ocean for an AI behemoth like Nvidia.

Helping feed customers

SoundHound is currently focused on in-vehicle and restaurant applications. For example, it has a partnership with fast food chain White Castle that allows customers to place orders without interacting with staff.

The firm also has a deal with Toast, the cloud-based restaurant management software company. Its SoundHound for Restaurants voice assistant can take multiple orders at once, as well as answering business inquiries, before integrating them with the Toast system.

Therefore, busy staff no longer have to choose between answering a call or serving customers in front of them.

More positive news

Big news out yesterday (18 March) was that SoundHound’s in-vehicle voice assistant would use a large language model while running on the Nvidia DRIVE platform.

Using edge computing, this will provide real-time generative AI capabilities even when there is no connectivity.

One example it gives is a driver saying: “I see a flashing light that looks like a car battery and I’m not sure what that means?”

The AI can deliver information directly from the car manual without the need to start flicking through that big chunky document.

The next Nvidia?

So far, so cool, I’d say. But what about the all-important numbers?

Well, the firm’s revenue grew 47% year on year to $46m, while it recorded an operating loss of $68m. In 2024, revenue is expected to accelerate 51% to around $70m, before exceeding $100m in 2025.

Unfortunately though, this anticipated high growth is already baked into the stock’s valuation. It is trading on an eye-watering forward price-to-sales (P/S) multiple of 39.8.

If next year’s revenue does reach $100m, the P/S multiple would drop to around 27. But even that is sky-high.

Now, a positive adjusted EBITDA of $2.8m is forecast for 2025, which is encouraging. And the stock could always keep going up in the near term. Meanwhile, a $2.5bn market cap suggests there is plenty of scope to grow over the long run.

As things stand though, this appears to be an overvalued growth stock caught up in the AI hype cycle.

Therefore, I don’t see evidence that it’s the next Nvidia, and I’d be very careful buying the shares at today’s valuation.

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