Will Marvell's non-GAAP gross margin fall below 59% in any quarter through Q2 FY2027?

Q4 FY2026 guidance is 58.5%-59.5% with midpoint at exactly 59.0%. The low end (58.5%) already breaches the 59% threshold in this question. Historically, Marvell has tended to guide conservatively but the midpoint IS 59.0%, meaning there is meaningful probability of Q4 alone coming in sub-59%. Even if Q4 comes in at 59.2%, the custom silicon mix continues growing in Q1 and Q2 FY2027. Three shots at a threshold that is at the edge of current guidance range creates cumulative probability well above 50%. The non-GAAP GM trajectory of 60.1% to 59.8% to 59.4% to 59.7% shows a compressing trend with the Q2 FY2026 print of 59.4% already dangerously close.

The non-GAAP GM already hit 59.4% in Q2 FY2026 before recovering to 59.7% in Q3. The trend is clearly compressing from 60.1%. Q4 guidance midpoint of 59.0% with a range including 58.5% shows management itself expects the possibility of sub-59%. Custom silicon targeting doubling by FY2028 means each quarter adds more mix pressure. For 3 independent quarters, even a 35-40% per-quarter probability of sub-59% gives cumulative probability of roughly 73%. The CEO confirmed custom XPU runs at 'fundamentally lower gross margin' than company average, and this segment is the fastest growing. The structural headwind of 100-200bps annually from custom mix makes it increasingly difficult to hold above 59%.

Marvell has managed to keep GM above 59% in all reported quarters despite custom silicon growth -- Q3 FY2026 bounced from 59.4% to 59.7%. Management has demonstrated some ability to manage quarterly margin through product mix timing and pricing on optical DSP. CFO Meintjes purchased shares at $78 with no unusual selling patterns suggesting awareness of margin pressure. However, Q4 guidance explicitly includes sub-59% as possible, and the custom silicon headwind is structural, not cyclical. Three quarters is a long window to avoid a 59% breach when the current level is 59.7% and the trend is compressive. The Moat Mapper's assessment of pricing power provides some counterweight but does not negate the mix math.

The math is straightforward. GM guidance for Q4 FY2026 is 58.5%-59.5%. Management literally guided to a range where approximately half the outcomes fall at or below 59.0%. That is just Q4 alone. Add Q1 and Q2 FY2027 with growing custom silicon mix (targeting doubling by FY2028), and the probability of staying above 59.0% for all three quarters is low. The fact that Q2 FY2026 already hit 59.4% -- barely above the threshold -- shows this is a near miss already happening before Q4 guidance even shifted lower. The estimated 100-200bps annual headwind from custom silicon mix means Q1 and Q2 FY2027 face even more pressure than Q4 FY2026.

Q4 guidance range brackets 59.0%. If guidance accuracy is symmetric, there is roughly a 50% chance Q4 alone comes in sub-59%. Custom silicon growth adds pressure in Q1 and Q2 FY2027 as it grows from ~18% to ~25%+ of total revenue. However, Marvell has shown ability to manage quarterly margin actively: the Q3 bounce from 59.4% to 59.7% suggests active margin management through product mix and pricing. Operating leverage from OpEx discipline may allow some trade-offs between gross and operating margin. For the full 3 quarters, probability of breaching at least once is elevated given the tight starting position and structural headwind.

Q4 guidance midpoint is exactly 59.0%. The low end of 58.5% is sub-59%. Custom silicon is growing as the largest and fastest-growing data center segment. Even the Moat Mapper, which takes the bullish stance, only claims current margin stability as moat evidence -- it does not claim margins will improve. The Myth Meter explicitly flags FY2028 margin expectations as DEMANDING given the custom mix headwind. The Moat Mapper vs Myth Meter debate is the key unresolved question, and the question of sub-59% GM is exactly the test of who is right. Three quarters with an accelerating structural headwind and a starting point right at the threshold favors resolution YES more often than not.

Q4 FY2026 guidance includes sub-59% at the low end (58.5%). Custom silicon is growing rapidly with structurally lower margins. Three quarters to breach the threshold means cumulative probability is well above any single-quarter estimate. GM has already compressed from 60.1% to 59.7% with Q2 touching 59.4%. High probability of at least one sub-59% quarter given the tight margin and structural headwinds.

GM trajectory: 60.1% to 59.8% to 59.4% to 59.7%. Already touched 59.4% in Q2 FY2026. Q4 guided to 58.5%-59.5% with midpoint at 59.0%. Custom silicon headwind of 100-200bps annually means Q1 and Q2 FY2027 face even more pressure. Three chances to go below 59% makes it more likely than not. However, Marvell's ability to bounce from 59.4% to 59.7% in Q3 shows some margin management capability that partially offsets the structural headwind.

Guidance midpoint at 59.0% for Q4, with structural headwind from growing custom silicon mix. Three quarters to trigger the resolution. Already compressed from 60.1% to 59.7% over four quarters. Probability favors at least one breach, but Marvell has managed to stay above 59% so far with active management. The balance tips slightly toward YES given the guidance range and structural trends.