Technology companies often partner to fill voids in each other’s product lineups and to capitalize on new markets. The rapidly evolving artificial intelligence (AI) is ripe for such collaborations particularly in the semiconductor chip space.
Nvidia (NVDA) and Marvell Technology (MRVL) recently announced such a deal, one that includes a $2 billion investment in the latter by the former. With these chip giants teaming up, traders may have even more reasons to monitor the Direxion Daily NVDA Bull 2X Shares (NVDU) and the Direxion Daily MRVL Bull 2X ETF (MRVU). NVDU attempts to deliver 200% of the daily performance of shares of Nvidia while MRVU, which launched in February, attempts to do the same with Marvell stock.
As for implications from the Nvidia/Marvell relationship, some market observers see it as boost for XPUs in a broad sense as well as Marvell’s related product suite.
“We see this as an endorsement of Marvell’s XPU strategy and XPUs more broadly,” noted Morningstar’s William Kerwin. “We believe XPUs help large AI customers avoid vendor lock-in, gain flexibility, and save cost. This agreement helps add interoperability between XPUs and GPUs, increasing the XPU value proposition.”
XPU Could Mark the Spot with MRVU
In simple terms, XPUs are artificial intelligence chips – a more advance form of central processing units (CPUs). The former are vital as computing demand surges on the back of AI advancements and that may highlight why Nvidia was keen to partner with Marvell.
For Nvidia investors and traders considering NVDU, the partnership with Marvell potentially broadens its leadership beyond GPUs while providing exposure to a significant growth market. As Kerwin noted, XPUs could account for a quarter of the AI compute market by 2030. There are potential rewards for Marvell and MRVU, too.
“The agreement includes placement for Marvell’s scale-up networking as well, which Marvell typically classifies as ‘XPU Attach,’” added the analyst. “We believe these ‘attach’ sockets augment the firm’s revenue per XPU and help it play across AI infrastructure even when it doesn’t provide the compute chip.”
For traders with an eye toward MRVU, the XPU theme is one to keep an eye on because related headlines and commentary from Marvell could provide the catalysts needed to spark this new leveraged ETF. What is clear is that XPU’s could be growth drivers for Marvell.
“We model 35% annualized growth for Marvell’s XPU revenue over the next five years, driven by its ramp with Microsoft. We don’t share investor concerns over its competitive position and see the Nvidia partnership as a bullish indicator that Marvell has staying power in this high-growth market,” concluded Kerwin.
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