How Does MRVL's Acquisition of Celestial AI Address Its Key Technology Shortcomings?

Marvell Technology Expands AI Connectivity Capabilities

Marvell Technology (MRVL) stands out as a major force in AI connectivity, offering a comprehensive range of solutions such as Ethernet, SerDes, DSPs, PCIe retimers, and switches. The company recently finalized its acquisition of Celestial AI, incorporating the Photonic Fabric platform into its offerings. This move marks a significant shift from traditional copper-based connections previously used by Marvell.

The integration of Celestial AI’s Photonic Fabric brings ultra-high bandwidth, minimal latency, and energy-efficient performance to Marvell’s portfolio. These enhancements position Marvell to take advantage of the rapidly expanding AI networking market, particularly in environments where GPUs and accelerators must communicate efficiently within large-scale AI clusters.

Celestial AI’s technology is purpose-built for these applications, delivering bandwidths in the hundreds of terabits per second, latency under 150 nanoseconds, and energy consumption as low as 2.5 pJ/bit. Such features are essential for hyperscale clients constructing advanced AI training infrastructures.

Another strategic benefit is the platform’s support for co-packaged optics and advanced 3D integration. The Photonic Fabric’s thermal resilience allows for closer integration with XPUs and switches, a development expected to drive future architectural changes in AI data centers.

Marvell anticipates that this business segment will achieve an annualized revenue of $500 million by fiscal 2028 and reach $1 billion by fiscal 2029. The acquisition is projected to positively impact non-GAAP earnings in the latter half of fiscal 2028.

Competitive Landscape: How Marvell Compares

Marvell Technology faces competition from industry peers such as Broadcom (AVGO) and Credo Technology (CRDO). Credo offers a broad selection of AEC, SerDes IP, Retimer ICs, and system design solutions, with its strong AEC business driving double-digit sequential growth in the last quarter.

Credo is expanding its hyperscale customer base and experiencing robust demand for its optical DSP and LRO products, as well as increased adoption of PCIe and Ethernet retimers. Broadcom maintains a dominant position in carrier Ethernet and transport markets, and is a key player in telecom optical interconnects and routing silicon. Its advanced 3.5D XDSiPs are especially important for high-density AI XPU connectivity.

Marvell’s Stock Performance, Valuation, and Outlook

Shares of Marvell Technology have declined 14.8% year-to-date, while the Electronics - Semiconductors industry has grown by 53.8% over the same period.

Marvell’s One-Year Performance

Source: Zacks Investment Research

From a valuation perspective, Marvell is trading at a forward price-to-sales ratio of 6.90, which is below the industry average of 8.46.

Forward 12-Month Price-to-Sales Valuation

Source: Zacks Investment Research

According to Zacks Consensus Estimates, Marvell’s earnings are expected to grow by 80.9% in fiscal 2026 and 21% in fiscal 2027. The estimate for fiscal 2026 has remained steady over the past two months, while the fiscal 2027 estimate was revised downward in the last week.

Source: Zacks Investment Research

Currently, Marvell Technology holds a Zacks Rank #4 (Sell).

For a full list of today’s Zacks #1 Rank (Strong Buy) stocks, click here.

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