Marvell Technology (MRVL-US) is making a bold move to strengthen its position in the AI and cloud connectivity market. On Tuesday (Dec. 2), the chipmaker announced plans to acquire optical interconnect startup Celestial AI for at least $3.25 billion in cash and stock, with the deal potentially reaching $5.5 billion if revenue milestones are met.
Strategic Expansion into Optical Connectivity
Marvell said the acquisition will enhance its capabilities in semiconductor networking and data center interconnects, enabling it to deliver more high-performance chips to cloud service providers and enterprise customers investing heavily in AI infrastructure.
Celestial AI specializes in photonic fabric technology, which connects large numbers of high-performance computing chips. As AI systems scale, requiring dozens or even hundreds of chips for training, traditional copper-based connections face bandwidth and distance limitations. Optical connectivity, with its speed and efficiency, is increasingly seen as the solution for next-generation AI workloads.
Marvell CEO Matt Murphy emphasized that the deal builds on the company’s leadership in connectivity and accelerates its roadmap to create a comprehensive platform for AI and cloud customers. Celestial AI’s technology could eventually be integrated directly into customized AI chips and switches, expanding Marvell’s reach in advanced computing.
Industry Endorsements
The acquisition has drawn praise from industry leaders. Amazon Web Services VP Dave Brown said the deal will accelerate innovation in optical connectivity, which is critical for deploying next-generation AI systems.
Celestial AI, valued at about $2.5 billion in a March funding round, has attracted notable backers, including Intel CEO Li-Wu Chen, who joined its board earlier this year. If Celestial AI achieves $2 billion in revenue by fiscal 2029, Marvell will pay the full $5.5 billion consideration. The transaction is expected to close early next year.
Financial Performance and Market Reaction
Marvell also reported strong quarterly results alongside the acquisition news. Third-quarter revenue came in at $2.08 billion, with adjusted earnings per share of $0.76, both beating expectations. The company projects fourth-quarter revenue of $2.2 billion and expects data center-related revenue to grow 25% in 2026.
Investors responded positively. Marvell shares surged more than 9% in after-hours trading, after closing up 1.96% at $92.89 during regular hours. Despite this rally, Marvell’s stock is still down about 18% year-to-date, lagging peers like Broadcom (AVGO-US), which has benefited more directly from the AI boom.
The Bottom Line
Marvell’s acquisition of Celestial AI underscores the growing importance of optical connectivity in scaling AI systems. While the company has faced pressure in recent years, this deal—combined with stronger earnings—signals a renewed push to capture growth in the AI infrastructure market. For investors, the move highlights Marvell’s ambition to compete more aggressively in the high-stakes race for next-generation data center technology.