Marvell Surges 14% as AI Chip Demand Crushes Estimates, While Costco Plots Strategy for $175 Billion Tariff Refund

The earnings trickle at the tail end of fourth quarter reporting season delivered a sharp split Thursday: semiconductor maker Marvell Technology rode surging AI infrastructure demand to blow past revenue estimates, while retail giants Costco and Gap navigated a messy tariff landscape that continues to reshape profit margins and pricing strategies.

Marvell reported first quarter revenue of approximately $2.4 billion, according to Reuters — roughly $130 million above the $2.27 billion analysts expected, per LSEG data. The company credited increased adoption of AI tools by enterprise clients for driving demand for the custom chips that power data centers. Shares jumped 14% in extended trading, one of the strongest reactions in a semiconductor earnings season that has otherwise been marked by volatility and disappointment.

The real story, though, wasn't just the beat — it was the outlook. CEO Matt Murphy said in the earnings release that the company expects "year-over-year revenue growth to accelerate each quarter in fiscal 2027, driven by continued strength in our data center business, with bookings continuing to grow at a record pace." Marvell guided first quarter fiscal 2027 revenue to around $2.4 billion, well above Wall Street's $2.281 billion estimate, signaling that AI infrastructure spending remains robust heading into the new fiscal year.

Data center products now account for roughly 74% of Marvell's total revenue, up from 73% the previous quarter — a small shift that underscores how deeply the company's fortunes are tied to cloud and AI infrastructure spending cycles. Non-GAAP gross margin held steady at 59.0%, suggesting Marvell is maintaining pricing power even as its product mix shifts toward more advanced AI workloads. The company also closed acquisitions of Celestial AI and XConn Technologies during the quarter, both of which are now baked into forward guidance.

Marvell's strong performance stands in contrast to the more cautious tone struck by retailers grappling with tariff uncertainty. Costco CEO Ron Vachris told investors on the company's earnings call that the wholesale giant plans to use any tariff refunds it receives from the US government to create "lower prices and better values" for customers, promising the company will "be transparent on how we plan to do this if and when we receive any refunds," according to Yahoo Finance.

That's a big "if." Costco was among more than 2,000 companies that filed lawsuits seeking to recoup costs from tariffs paid under the International Emergency Economic Powers Act (IEEPA), which the Supreme Court struck down. A federal judge affirmed this week that "all importers of record" would be entitled to refunds for those tariffs, but with $175 billion at stake and the Trump administration expected to appeal, experts caution that more legal hurdles lie ahead. Vachris acknowledged the complexity, noting that "it is not yet clear what the process will be, what refunds, if any, will be received and when this will happen."

Costco reported fiscal second quarter results that modestly beat estimates on both the top and bottom lines. Diluted earnings per share of $4.58 topped Wall Street's $4.54 expectation, while revenue grew to $69.5 billion, exceeding the $69.3 billion estimate, according to S&P Global Market Intelligence. Adjusted same-store sales picked up to 6.7% in the quarter, roughly in line with estimates but slightly below sales growth in the same quarter a year ago. Despite the solid numbers, the stock drifted lower in extended trading — a sign that investors may have been hoping for more clarity on the tariff refund timeline or stronger same-store sales momentum.

Vachris did note that "in many cases, we didn't pass the full cost on to our members," suggesting Costco absorbed some tariff pain to maintain its value proposition. The company's 13% gain year-to-date reflects its reputation as a safe haven when consumers seek value in uncertain economic environments.

Gap, meanwhile, offered a stark reminder of how tariffs can hammer profit margins when you can't fully pass costs along. Shares fell more than 8% Friday morning after the company reported fourth quarter earnings of $0.45 per share — in line with estimates — but revenue of $4.23 billion that came in just shy of the $4.24 billion Wall Street expected, according to Yahoo Finance. The Gap brand posted the strongest same-store sales, up 7% year over year, while Athleta sales cratered 10% year over year. Overall same-store sales growth of 3% for 2025 also came in slightly below the 3.47% consensus estimate.

On the earnings call, Gap CFO Katrina O'Connell explained that tariffs weighed heavily on financial results last year. Gap sources nearly half of its products from Southeast Asia. "Changes in global tariff rates in 2025 had a substantial impact on our profits," O'Connell said, noting that tariffs had a 200 basis point effect on gross and operating margins in the fourth quarter and a 120 basis point effect for the full fiscal year.

For the year ahead, Gap expects net sales growth of approximately 2% to 3% year over year and adjusted profits of $2.20 to $2.35. However, the guidance was made with the assumption that President Trump's most sweeping tariffs would still be in effect. The Supreme Court struck down those tariffs, and Trump imposed a new 10% tariff under a different authority, which could have a net beneficial effect on Gap's year — though the company didn't quantify that potential upside.

The divergence between Marvell's blowout quarter and the retail sector's tariff headaches captures the broader economic moment: AI infrastructure spending continues to defy gravity, while consumer-facing businesses navigate a policy environment that remains unpredictable and costly. Marvell's 8% gain after hours could easily evaporate if management fails to deliver convincing details on the fiscal 2027 acceleration during its conference call — the company has a history of walking back initial enthusiasm on earnings calls. But for now, the numbers speak for themselves: data center chips tied to AI workloads are one of the few places in the market where demand is accelerating, not decelerating.

Costco's pledge to pass tariff refunds through to customers, if it ever happens, is a savvy PR move that reinforces the company's value-first brand. But it also highlights the absurdity of the current tariff regime: companies are suing the government for refunds on tariffs that were ruled unconstitutional, the government is appealing those rulings, and retailers are left guessing whether they'll see any money back — and when. In the meantime, consumers are paying higher prices, and companies like Gap are watching their margins get squeezed.

The S&P 500 is tracking a 14.2% earnings growth rate for the fourth quarter, which would mark the index's fifth consecutive quarter of double-digit earnings growth, according to Yahoo Finance. But that headline figure masks a messier reality: growth is concentrated in a handful of AI-driven tech names, while much of the rest of the market is grinding through tariff uncertainty, weakening consumer demand, and margin pressure. Marvell's strong quarter suggests the AI infrastructure boom still has legs. Whether that's enough to carry the broader market forward is another question entirely.