$3.25B! Marvell Acquires Celestial AI
Recently, Marvell Technology announced a major acquisition and optimistic outlook for the next fiscal year. The chipmaker will acquire semiconductor startup Celestial AI for $3.25 billion, with the deal comprising $1 billion in cash and 27.2 million shares of Marvell common stock valued at $2.25 billion. The transaction is expected to close in the first quarter of 2026.
Marvell projects that Celestial AI will start contributing meaningful revenue in the second half of fiscal 2028, reaching $500 million in annualized revenue by the fourth quarter of that year and doubling to $1 billion by fiscal 2029's fourth quarter.
The surge in generative AI is accelerating chip development, as companies race to design the fastest, most energy-efficient devices for advanced data centers. Marvell and competitors like Broadcom support cloud companies in creating custom chips tailored for their data center applications—a business that has become increasingly central to both companies.
CEO Matt Murphy highlighted that Marvell expects total revenue of around $10 billion in the next fiscal year, with data center revenue growing by 25%. Custom chip revenue is forecasted to increase by 20% next year, without significant quarterly fluctuations. Analysts note that Marvell is helping major cloud providers such as Amazon and Microsoft develop their internal AI chips.
The Celestial acquisition will strengthen Marvell's capabilities in photonics, which uses light instead of electrical signals to connect AI and memory chips. This positions Marvell to compete with Broadcom and NVIDIA in next-generation photonics infrastructure. Celestial's technology is expected to open a new market potentially worth $10 billion for Marvell.
“Once the deal closes, Marvell will be a major force in silicon photonics,” Murphy said, noting that large cloud companies are expected to begin deploying photonics technology for large-scale applications around 2027 or 2028, with wider adoption anticipated over time.
As part of the acquisition, Marvell issued warrants to Amazon, allowing the company to purchase up to $90 million of Marvell stock—approximately 1 million shares at $87 per share—based on its Photonic Fabric product purchases through the end of 2030.
According to data compiled by the London Stock Exchange Group, Marvell expects Q4 revenue of roughly $2.2 billion, plus or minus 5%, slightly above analysts' consensus of $2.18 billion. For the third quarter ending November 1, Marvell reported a 36.8% year-over-year revenue increase to $2.07 billion, in line with expectations.
