How MRVL's Celestial AI Acquisition Fills Its Critical Technology Gap?

Marvell Technology MRVL is one of the leading players in the AI-connectivity space with its portfolio covering Ethernet, SerDes, DSPs, PCIe retimers and switches. The company has recently completed the acquisition of Celestial AI and integrated the Photonic Fabric platform, which will be a leap from the copper connectivity that MRVL used to rely on.

Celestial AI’s Photonic Fabric platform adds ultra-high-bandwidth, low-latency and low-power to MRVL’s portfolio that will enable the company to capitalize on the fast-growing AI scale-up networking opportunity, solving traffic in scale-up networks, where GPUs and accelerators communicate inside large AI clusters.

Celestial AI’s technology is specifically designed for this domain, offering hundreds of terabits per second of bandwidth with latency below 150 nanoseconds and energy efficiency around 2.5 pJ/bit. These capabilities are critical for hyperscale customers building massive AI training systems.

Another important strategic advantage is support for co-packaged optics and deeper 3D integration. The Photonic Fabric’s thermal stability enables tighter integration with XPUs and switches, which is expected to be a key architectural shift in future AI data centers.

MRVL expects the business to reach a $500 million annualized revenue run rate by fiscal 2028 and $1 billion by fiscal 2029, with the deal becoming accretive to non-GAAP earnings in the second half of fiscal 2028.

How Competitors Fare Against MRVL

Marvell Technology competes with Broadcom AVGO and Credo Technology CRDO in the connectivity market. Credo has a wide portfolio of AEC, SerDes IP, Retimer ICs, and system design. Credo’s business is mainly driven by its strong AEC business, which posted double-digit sequential growth last quarter.

Credo’s hyperscaler customer base is expanding, while it is also experiencing robust growth in optical DSP and LRO solutions, along with rising PCIe and Ethernet retimer adoption. Broadcom has a stronghold in carrier Ethernet and transport markets and is a major player in telecom optical interconnects and routing silicon space. Broadcom’s advanced 3.5D XDSiPs are crucial for AI XPU connectivity due to higher density.

MRVL's Price Performance, Valuation and Estimates

Shares of Marvell Technology have lost 14.8% year to date against the Electronics - Semiconductors industry’s growth of 53.8%.

MRVL One-Year Perfromance Chart

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From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 6.90X, lower than the industry’s average of 8.46X.

MRVL Forward 12-Month (P/S) Valuation Chart

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The Zacks Consensus Estimate for MRVL’s fiscal 2026 and 2027 earnings implies year-over-year growth of 80.9% and 21%, respectively. The estimate for fiscal 2026 has remained unchanged in the past 60 days, while the estimate for fiscal 2027 has been revised downward in the past seven days.

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Marvell Technology currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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