What to make of more AI warnings in risk factors?

Last week, I wrote about a lot of new language in Nvidia’s risk factors and how one of their risk factors quadrupled in size between its August 10-Q and the 10-K that it filed February. It was a similar same story at Marvell Technology, which filed its 10-Q late Friday, after markets closed.

A side-by-side comparison between the 10-Q filed in May and this most recent 10-Q shows that nearly 200 new words were added to the same exact risk factor in the current filing. What was that additional language? Here’s a brief snippet:

Public resistance to data center siting has intensified as the scale of Al-era facilities has grown, with concerns centered on strain to local energy grids and water supplies, increased consumer utility rates, persistent industrial noise, diminished air quality, loss of open space or rural character, and limited local employment relative to the resources consumed.

There was also new language that warned about “markets may not develop as anticipated if AI training and inference costs drop dramatically due to customer adoption of less expensive alternative technologies” (read: Chinese models, like Kimi).

All told, the company devoted 657 words to this risk factor, which was labeled “Unfavorable and uncertain conditions”. For both the May quarter and the 10-K filed in February, this same risk factor was 464 words, or a 41% increase in verbiage.  In the 10-Q filed last August, this risk factor was only 324 words, meaning that it doubled over the past year.

While I wouldn’t exactly call this a smoking gun, it is a pretty good example of a company adding additional language to couch all of the excitement around its AI prospects after a stock surge. Marvell’s stock is up 145% year-to-date as of today with the stock trading at around $208 a share. But that’s about 1/3 less than when it peaked in early June and was trading at over $309 a share.

As I say all the time, there are no accidents in SEC filings. Everything is there for a reason!