Marvell Technology shares rallied on Wednesday after the chip designer agreed to buy semiconductor startup Celestial AI for $3.25 billion. The move highlights Marvell’s effort to expand in artificial intelligence infrastructure and regain momentum after a difficult year for the stock. Gains of around 9% intraday pushed the shares to a nine-month high and partly reversed a year-to-date decline of about 16%.
Investors responded to a clearer roadmap around AI data centers and custom chip programs. Marvell has faced intense competition in custom AI chips and networking, as larger rivals scaled their own solutions. The Celestial AI acquisition and new guidance gave the market stronger signals on growth in those areas.
The Celestial AI acquisition gives Marvell access to photonic fabric technology that uses light instead of electrical signals to link AI chips and memory. This optical approach targets faster and more energy-efficient data movement inside next-generation data centers, where AI workloads place heavy strain on existing networks. Cloud providers increasingly seek such technologies as they scale generative AI systems across many racks of hardware.
Marvell plans to build Celestial AI’s photonics into its next generation of photonics-related infrastructure products. Chief Executive Matt Murphy indicated that these platforms could open an addressable market of around $10 billion for the company. Hyperscale customers aim to increase bandwidth while cutting power use, and Marvell wants to address both goals with photonics and advanced switching.
The deal also deepens Marvell’s relationship with Amazon. The company issued a warrant that allows Amazon to buy Marvell shares tied to its purchases of photonic fabric products through 2030. Analysts noted that Celestial AI’s optical technology, combined with backing from a major cloud customer, improves Marvell’s position against NVIDIA and Broadcom in AI networking and co-packaged optics.
Marvell forecast roughly $2.2 billion in revenue for the fiscal fourth quarter and guided to stronger growth in the next fiscal year. Murphy told investors that total revenue could reach about $10 billion next year, supported by an expected 25% rise in data center sales.
The company also reported adjusted earnings per share of $0.76 on revenue of $2.08 billion for the third quarter, slightly ahead of market estimates, and projected fourth-quarter earnings of $0.79 per share on revenue near $2.2 billion.
The company expects its custom AI chip revenue to grow about 20% next year as large customers renew and expand projects. Management said repeat orders should reduce the risk of demand “air pockets” that previously affected the business. Marvell projects that Celestial AI’s technology will add about $500 million in annualized revenue by late fiscal 2028 and could reach $1 billion a year later as photonics products scale.
Marvell currently trades at a 12-month forward price-to-earnings ratio below that of Broadcom. The strengthened AI infrastructure strategy and the Celestial AI deal prompted investors to reassess that valuation gap as the company seeks a larger role in the AI data center supply chain.
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