Marvell To Buy Celestial AI In Up To $5.5B Deal After Strong Q3 And Bullish AI Outlook

• The company said that the deal is aimed at advancing its strategy for new AI and cloud data centers. 
• “As bandwidth and reach continue to increase, every connection point in the data center must move from copper to optical,” Marvell said.
• The company expects meaningful revenue contributions from the acquisition starting in the second half of fiscal 2028.

Semiconductor company Marvell Technology, Inc. (MRVL) said on Tuesday that it has entered into a definitive agreement to acquire startup Celestial AI for a total deal value of up to $5.5 billion, which includes an upfront consideration of $3.25 billion, in both cash and stock.

The company said that it would also pay Celestial AI equity holders incremental contingent consideration of up to approximately 27.2 million shares of Marvell common stock, having a value of up to $2.25 billion, upon the achievement of certain revenue milestones.

The deal is expected to close in the first quarter of 2026, upon the receipt of necessary approvals. The company said that the deal is aimed at advancing its strategy for new AI and cloud data centers.

Most data centers use old-school copper wires to link AI chips called XPUs. Celestial AI's "Photonic Fabric" technology uses light (optics) instead of electricity through wires, reducing latency while providing high bandwidth.

“As bandwidth and reach continue to increase, every connection point in the data center must move from copper to optical,” Marvell said.

Financial Impact

The company expects meaningful revenue contributions from the acquisition starting in the second half of fiscal 2028, touching a $500 million annualized run rate in the fourth quarter (Q4) of fiscal 2028 and doubling to a $1 billion dollar run rate by Q4 of fiscal 2029.

Q3 Earnings

The company on Tuesday also reported third quarter adjusted earnings per share of $0.76, above an analyst estimate of $0.74, according to data from Fiscal AI.

Net revenue in the quarter came at $2.075 billion, setting a new record and marking a growth of 37% while also exceeding expectations of $2.07 billion.

“Looking ahead, we see demand for our products continuing to accelerate, and as a result, our data center revenue growth forecast for next year is now higher than prior expectations,” said Marvell CEO Matt Murphy. “I am also excited to announce the acquisition of Celestial AI – a transformational milestone that accelerates our scale-up roadmap for interconnect. This acquisition further strengthens Marvell’s position at the forefront of one of the fastest-growing opportunities in AI datacenter infrastructure.”

Looking Ahead

For the fourth quarter, the company expects net revenue to be $2.2 billion, plus or minus 5%, and adjusted net income per share of $0.79, plus or minus $0.05 per share. This beats Wall Street's estimate of revenue of $2.17 billion and earnings of $0.77 per share.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around MRVL jumped from ‘neutral’ to ‘extremely bullish’ territory over the past 24 hours while message volume jumped from ‘low’ to ‘high’ levels.

A Stocktwits user opined that the company is cautious with their spending in spite of the acquisition.

Another sounded hopes for the stock touching all-time highs this week.

https://stocktwits.com/NaplesFl/message/637968365

MRVL stock is down by about 16% this year and by about 4% over the past 12 months.

Read also: Comcast Wants To Combine NBCUniversal, Warner Bros Under A Larger Entity: Report

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