Is Marvell Technology poised for a major comeback? Shares of the chipmaker soared recently, jumping over 9% after announcing a $3.25 billion acquisition of Celestial AI, a semiconductor startup. This move is a clear signal that Marvell is doubling down on its AI infrastructure ambitions.
After a challenging year marked by intense competition in custom AI chips and networking, this acquisition has reignited investor enthusiasm. Could this be the turning point Marvell needs to regain its momentum?
## Celestial AI: A Game Changer for Marvell?
The Celestial AI deal brings photonic technology into Marvell’s portfolio, specifically designed for next-generation data centers. This positions Marvell to directly compete with giants like Broadcom and Nvidia as hyperscalers scramble to develop faster and more energy-efficient systems to meet the demands of the generative AI revolution.
Furthermore, Marvell issued a warrant to Amazon, allowing the e-commerce giant to purchase Marvell shares based on its purchases of photonic fabric products through 2030. This strategic partnership with Amazon underscores the significance of Celestial AI’s technology and its potential impact on Marvell’s future growth.
## What’s Next for Marvell?
Analysts at TD Cowen believe that Celestial AI, with Amazon’s backing, strengthens Marvell’s co-packaged optics (CPO) technology, making the chipmaker a more formidable player in custom XPUs and scale-up switching.
CEO Matt Murphy anticipates that Celestial’s technology will contribute to a new $10 billion market for Marvell, with projected annualized revenue reaching $500 million by late-fiscal 2028 and doubling to $1 billion the following year. Driven by a 25% surge in data center sales, Marvell expects roughly $10 billion in revenue for its next fiscal year, with custom chip revenue projected to rise 20%. With this strategic acquisition and optimistic projections, Marvell is positioning itself for a significant resurgence in the AI infrastructure landscape.
