Lumentum Holdings (LITE) jumped 15% in after-hours trading on Oct. 28 following reports that Marvell Technology (MRVL) was in advanced talks to buy the company. The rally added to a 329% gain over the past year, leaving the stock well above its 52-week low of $184.20.
www.barchart.comInvestors have been buying into the demand for the company’s lasers and optical components, which help move data through AI data centers.
More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.
But Lumentum Holdings cannot make enough to meet that demand. Its optical components are sold out through early 2029, and CEO Michael Hurlston said it could not meet roughly 70% of demand for certain products through 2027. While the takeover reports lifted Lumentum Holdings, Marvell Technology shares fell sharply.
So, is a deal close, or are investors getting ahead of themselves? Let’s find out.
How Close Is Marvell to a Deal?
Marvell Technology is reportedly in advanced talks to buy Lumentum, with an agreement possible as soon as early November. That makes a deal look closer, but it is not a guarantee.
The purchase would build on Marvell Technology’s push into AI networking, including its February 2026 acquisition of Celestial AI and its Photonic Fabric technology, which helps connect AI processors. Buying Lumentum Holdings would bring more of the lasers and optical components used in those connections under one roof. The companies have also worked together, demonstrating optical circuit switching technology earlier this year.
Investors have reacted differently to the two stocks. By the Oct. 29 close, Marvell Technology had dropped more than 13%, while Lumentum Holdings finished about 0.6% higher.
For now, the talks remain just that. The report does not establish a signed agreement or confirmed purchase price. Until the companies announce terms, investors still cannot judge what Marvell Technology would pay or what Lumentum Holdings shareholders would receive.
The Business Behind the Buyout Interest
Lumentum Holdings just posted strong fiscal fourth-quarter results. Revenue jumped 109.3% from a year ago to $1.006 billion. Components sales rose 102.7% to $649.4 million, while Systems revenue climbed 122.6% to $356.9 million. Adjusted gross margin improved to 50.4% from 37.8%, and adjusted operating margin hit 36.6% versus 15% last year.
Adjusted EPS came in at $3.23, up from $0.88. A $7.8 billion noncash debt-extinguishment charge did push the company to a $7.16 billion GAAP net loss. Looking ahead, management expects fiscal Q1 2027 revenue between $1.225 billion and $1.275 billion, with adjusted EPS of $4.05 to $4.35. That growth is already showing up in the stock.
The company is also moving closer to the AI chips themselves. On September 21, Lumentum Holdings showed off an optical-connectivity design with Qualcomm (QCOM) and Corning (GLW). The setup pairs Lumentum’s lasers with their interface and fiber tech to create faster, lower-power links between AI processors.
In March 2026, the company also bought a 240,000-square-foot manufacturing plant in Greensboro, North Carolina. The site will make indium-phosphide lasers for big AI data centers, and NVIDIA (NVDA) is listed as a key customer there.
What Analysts See Beyond the Takeover
Lumentum Holdings reports its next earnings on November 5 after the market closes. Analysts are looking for September-quarter EPS of $3.82, up 536.67% from $0.60 a year ago. For the full fiscal 2027 year, the estimate is $19.79, a 143.42% jump from $8.13.
Piper Sandler stuck with its “Overweight” rating and $400 target on Marvell Technology, not on Lumentum. The firm pointed out that optical networking helps move AI data faster while using less power. It called Lumentum’s high-powered lasers a key enabling technology and noted the two companies already showed complementary optical tech earlier this year. The idea is that putting those pieces together could handle more of the connectivity needs from bigger AI systems.
Before the takeover talk even started, Lumentum got a fresh bullish call. StoneX started coverage on October 26 with a “Buy” rating and a $1,200 price target. Analyst Cody Acree focused on the company’s own business outlook. Management now sees demand for near-packaged optics possibly showing up in late 2027 or early 2028, earlier than they thought before. Acree called it “a credible deployment architecture rather than distant optionality” and pointed to continuous-wave lasers, external light-source assemblies, and optical engines as the products that could benefit.
Right now, all 26 analysts covering Lumentum Holdings give it a consensus “Strong Buy” rating. The average price target sits at $1,170.19, which is about 27.26% higher than the current share price levels.
www.barchart.comConclusion
Whether Marvell actually closes a deal for Lumentum is still an open question. The advanced talks and clear strategic fit give the rumor real weight, yet valuation gaps and regulatory hurdles can still kill it. Even without a buyout, Lumentum’s sold-out capacity through 2029 and surging optical demand already support the stock’s strong run. Shares look more likely to keep grinding higher on fundamentals than to collapse if talks fall apart. The next catalyst is the November 5 earnings report, which should show whether the business itself continues to deliver.
On the date of publication, Ebube Jones did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
If Taiwan Semi Raises Prices, It Could Be Bad News for Intel Stock. Here’s Why. Why Wedbush Is Betting Big on SK Hynix Stock After Earnings Lumentum Jumped on Reports Marvell Is in Late-Stage Talks to Acquire the Company. LITE Stock Is a Buy No Matter What. Regeneron Stock Just Hit a 2-Year High. Here's Why.