Marvell (MRVL) Stock Rallies on Strong Data Center Outlook and AI Acquisition

TLDR

• Marvell beat Q3 estimates with 76 cents EPS on $2.08 billion revenue
• Data center revenue grew 38% to $1.52 billion, exceeding forecasts
• Company buying Celestial AI for $3.25 billion to enter photonics market
• Management projects 25%+ data center growth for next fiscal year
• Stock reversed initial decline to surge 14% after earnings call

Marvell Technology shares whipsawed Tuesday evening, dropping 5% before surging 14% once management revealed its growth plans for next year.

Marvell Technology, Inc., MRVL

The semiconductor company reported third-quarter earnings of 76 cents per share on revenue of $2.08 billion. Wall Street expected 74 cents per share on $2.07 billion revenue.

Data center sales hit $1.52 billion, up 38% year-over-year and above the $1.51 billion consensus. CEO Matt Murphy said strong demand for data center products drove the results.

For the fourth quarter, Marvell guided to 79 cents per share earnings and $2.2 billion revenue, both roughly in line with estimates. The lackluster guidance initially sent shares lower.

Data Center Forecast Exceeds Expectations

The forecast topped Wall Street projections and doesn’t include contributions from the pending Celestial AI acquisition. Murphy said total company revenue should reach roughly $10 billion next fiscal year.

Shares jumped nearly 10% in Wednesday premarket trading after the after-hours rally. The stock had been down over 15% in 2025 before the report.

Celestial AI Deal Brings Photonics Technology

Marvell announced it will pay $3.25 billion for AI startup Celestial AI. The deal includes $1 billion cash and 27.2 million Marvell shares worth $2.25 billion.

Celestial gives Marvell photonics technology, which uses light instead of electrical signals to connect AI and memory chips. Murphy told Reuters the acquisition creates a “silicon photonics powerhouse” and opens a new $10 billion market.

Cloud providers plan to deploy photonics at scale in 2027 or 2028. Marvell expects Celestial to generate meaningful revenue in the second half of fiscal 2028, reaching $500 million annualized by Q4 fiscal 2028 and $1 billion by Q4 fiscal 2029.

The company issued Amazon a warrant to purchase up to $90 million in Marvell stock at $87 per share. The warrant ties to Amazon’s purchases of photonic products through 2030. The deal should close in Q1 2026.

Custom Chip Business Growth Accelerates

Marvell’s custom chip revenue is projected to grow 20% next year. The company helps Amazon and Microsoft build proprietary AI chips, according to JP Morgan.

Murphy said the company doesn’t expect major quarterly fluctuations in custom chip revenue. UBS analyst Timothy Arcuri rates the stock Buy with a $110 target, noting customers are diversifying across multiple chip suppliers.

Third-quarter revenue rose 36.8% to $2.07 billion, matching analyst estimates. Marvell competes with Broadcom and Nvidia in custom chips and photonics.

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