New news in the chip industry! Before the US stock market opened on Wednesday, Marvell Technology , a leading ASIC chip manufacturer, announced... Marvell's stock price surged over 11%. Earlier, the company released its third-quarter results, projecting a recovery in its data center business for the next fiscal year. Business grew by 25% year-on-year, exceeding market expectations.
In addition, Marvell plans to acquire a semiconductor company for $3.25 billion. Startup Celestial AI offers a technology called photonic interconnect, which connects components within AI infrastructure, relying on light to transmit data more efficiently and aid in artificial intelligence. The system runs faster.
Straight rise
Shares of Marvell Technology surged in pre-market trading on Wednesday. As of press time, the stock was up 11.35%. If this upward trend continues after the official opening of the US stock market, the company's market capitalization will increase by more than $8 billion in a single day.
After the US stock market closed on Tuesday, Marvell Technology released its financial results for the third quarter of fiscal year 2026, ending November 1. The data showed that the company's revenue for the third quarter was $2.075 billion, a year-over-year increase of 36.83% and a quarter-over-quarter increase of 3.41%; net profit was $1.9 billion, a year-over-year increase of 381% and a quarter-over-quarter increase of 876%; gross margin for the quarter was 51.6%, a quarter-over-quarter increase of 1.2%; adjusted earnings per share were 76 cents, exceeding analysts' previous expectations of 74 cents.
The data center business, a pillar of the company's revenue, performed solidly, generating $1.52 billion in revenue in the third quarter, a 38% year-over-year increase, slightly exceeding Wall Street's expectations of $1.51 billion. CEO Matt Murphy stated in the earnings report that the third-quarter revenue performance was "driven by strong demand for data center products."
Marvell Technology manufactures semiconductor products for data centers, including server processors, AI accelerators, and network and storage chips. The company also manufactures chips for enterprise networks, carrier infrastructure, consumer devices, and automotive and industrial applications. Its major customers include Amazon . and Microsoft .
"We expect strong growth in the fourth quarter and a strong fiscal year to close out, with full-year revenue growth projected to exceed 40%," Matt Murphy said in a press release. "Looking ahead, we see continued acceleration in demand for our products, and therefore, our forecast for data center revenue growth next year is now higher than previously expected."
During its earnings call, Marvell Technology projected a 25% increase in its data center revenue next year, exceeding Wall Street expectations and boosting investor confidence. Matt Murphy added that this optimistic forecast did not include the company's recently announced acquisition plans.
Following the release of the aforementioned financial report, several investment banks raised their target prices for Maiwell Technology. Among them, JPMorgan Chase... Needham raised its price target for Marvell Technology from $120 to $130; Needham raised its price target for Marvell Technology from $95 to $120; and TD Cowen raised its price target for Marvell Technology from $85 to $100, while maintaining a "hold" rating.
In 2024, Marvell Technology's stock price surged 83% as investors bet on customers investing heavily in AI hardware. However, the company's stock price has fallen 16% this year as it struggles to convince the market that it can win long-term contracts amid fierce competition.
“Investors still view the custom ASIC business through a digital lens—it’s either get in or get out,” UBS analyst Timothy Arcuri wrote in a report on November 23. ASIC, or Application-Specific Integrated Circuit, is an integrated circuit chip customized for a specific purpose. Google’s Tensor Processing Unit is one example, currently considered by some to be Nvidia’s… Potential alternatives to chips.
“On the contrary, we believe most customers are diversifying their technology roadmaps, adopting not only multiple GPU vendors but also multiple ASIC vendors,” Arcuri added. UBS gave Marvell Technology a “buy” rating with a target price of $110.
Proposed acquisition of Celestial AI
Marvell Technology announced after the US stock market closed on Tuesday that it had reached a definitive agreement to acquire Celestial AI. Marvell will acquire the semiconductor startup Celestial AI for $3.25 billion in cash and stock. According to the agreement, if Celestial AI achieves certain revenue milestones in the future, Marvell Technology will also pay Celestial AI shareholders an additional contingent consideration of up to approximately $2.25 billion (up to approximately 27.2 million Marvell Technology common shares).
Marwell Technology stated that Celestial AI is a disruptive photonic structure technology platform company built for large-scale optical interconnects. This strategic acquisition marks a transformative step for the company in accelerating its next-generation artificial intelligence and cloud data center connectivity strategy.
Marwell Technology states that artificial intelligence is reshaping data center architecture at an unprecedented pace. Next-generation acceleration systems are no longer confined to single racks—they are evolving into multi-rack configurations connecting hundreds of XPUs, coupled with integrated, high-bandwidth, ultra-low-latency, and scalable architectures of any scale. This architecture allows each XPU to directly access the memory of all other XPUs. These advanced architectures require dedicated switches and protocols, such as UALink, designed to deliver the performance and efficiency required for large-scale applications.
Given the demands of multi-rack scale architectures in terms of power consumption, bandwidth, latency, and transmission distance, interconnects will increasingly shift towards all-optical connections. This acquisition will enable Marvell Technology to lead this technological shift and open up a completely new semiconductor target market for optical interconnects. Marvell Technology anticipates that this expanded portfolio will make it the industry's most comprehensive provider of next-generation data center high-bandwidth, low-power, low-latency connectivity solutions.
Marwell Technology anticipates that Celestial AI will begin contributing significantly to revenue in the second half of fiscal year 2028, reaching an annualized run rate of $500 million in the fourth quarter of fiscal year 2028, and doubling to $1 billion in the fourth quarter of fiscal year 2029. Beyond connecting XPUs in large-scale networks, Celestial AI's photonic structure technology platform will enable a wide range of transformative applications in the future, including memory pool devices and optical alternatives to traditional chip-to-chip connections in multi-chip packages.
In a media interview, Matt Murphy stated that Celestial AI's technology will be used in Marvell Technology's next-generation silicon photonics-related infrastructure hardware products, which will contribute a new, potentially $10 billion blue ocean market to the company.
"When everything settles down, we will build a 'super-powerful player' in the silicon photonics field within Marvell Technology," said Matt Murphy, referring to large cloud computing giants like Amazon AWS. Industry leaders will begin large-scale application and deployment of silicon photonic interconnect technology in 2027 or 2028. He also stated that this technology will eventually achieve extremely widespread adoption globally.
(Source: Securities Times)
