AsianFin -- Shares of Marvell Technology fell sharply, dropping 11.3% in premarket trading on Friday, after the chipmaker issued a data center demand outlook that came in below investors’ high expectations. The decline comes amid heightened anticipation for AI-focused chips powering cloud services for major players like Microsoft and Amazon.

Investor excitement around AI has driven valuations in the semiconductor sector, particularly for companies supplying custom chips for machine learning workloads. Marvell, which provides specialized networking and data center solutions, had seen increased attention as AI adoption surged.

However, the company’s latest guidance suggested that demand for its data center products may not accelerate as quickly as the market had hoped. This mirrors recent trends across the industry, where AI hype has met more measured growth.

Nvidia, another high-profile AI chipmaker, recently beat earnings forecasts but saw a slowdown in data center growth, prompting a post-earnings pullback in its stock. Peer Broadcom has yet to release its results, leaving investors cautious about the broader AI chip sector.

The premarket selloff in Marvell highlights the market’s sensitivity to data center demand projections and the challenges facing chipmakers trying to capitalize on AI-driven cloud growth. Analysts note that while long-term AI adoption remains robust, near-term expectations may need recalibration as the market digests supply chain, inventory, and adoption dynamics.