.Marvell (MRVL) Q3 2026 Earnings Report

Semiconductor firm Marvell announced on Tuesday that it will acquire AI‑focused startup Celestial for an initial cash‑and‑stock consideration of at least $3.25 billion.

The purchase price could rise to $5.5 billion if Celestial meets predefined revenue milestones, according to the company’s filing.

Marvell’s shares jumped 13 % in after‑hours trading after the firm reported third‑quarter results that beat consensus estimates and projected a 25 % increase in data‑center revenue for the coming year.

The acquisition represents an aggressive push to complement Marvell’s existing networking semiconductor portfolio with advanced optical‑interconnect technology—an area that is rapidly becoming a bottleneck for large‑scale AI training and inference workloads.

Industry analysts note that AI‑driven data‑center spending is expected to exceed several hundred billion dollars over the next three years, and optical solutions are viewed as the only viable path to scale beyond the limits of copper‑based interconnects.

Marvell’s stock has fallen about 18 % year‑to‑date, even as peers such as Broadcom have enjoyed valuation lifts fueled by the AI hype cycle.

Celestial, founded in 2022, is developing a “photonic fabric” that uses silicon‑photonic waveguides to link dozens or hundreds of high‑performance compute units. The startup was valued at $2.5 billion in a March funding round and counts Intel’s CEO Lip‑Bu Tan on its board.

Optical connections are gaining traction because they can transmit data at higher bandwidths over longer distances while consuming less power than copper. However, the technology carries a higher price tag, making it attractive primarily to hyperscale cloud providers and enterprise AI labs that demand peak performance.

“This builds on our technology leadership, broadens our addressable market in scale‑up connectivity, and accelerates our roadmap to deliver the industry’s most complete connectivity platform for AI and cloud customers,” said Marvell CEO Matt Murphy.

The first commercial deployment of Celestial’s photonic fabric will target systems built around “large XPUs,” custom AI accelerators that hyperscalers are investing billions to develop. Marvell also indicated that the optical technology could be integrated directly into custom ASICs and switches, creating a tightly‑coupled ecosystem for next‑generation AI workloads.

Amazon Web Services executive Dave Brown praised the deal, stating that Marvell’s acquisition will help “further accelerate optical scale‑up innovation for next‑generation AI deployments.”

The earn‑out provision caps the total consideration at $5.5 billion and triggers the maximum payout if Celestial records $2 billion in cumulative revenue by the end of fiscal 2029. The transaction is expected to close early next year.

In the reported quarter, Marvell generated earnings of $0.76 per share on $2.08 billion of revenue, marginally ahead of LSEG consensus expectations of $0.73 per share and $2.07 billion in sales. The company forecast fourth‑quarter revenue of $2.20 billion, slightly above the $2.18 billion consensus.

Analysts see the acquisition as a bet on the long‑term economics of optical interconnects. If Marvell can successfully integrate Celestial’s photonic fabric into its product line and secure design wins with the major AI chip makers, the deal could unlock a new growth engine that compensates for the modest performance of its traditional silicon‑based networking chips.