Marvell Technology announced a significant strategic move over the weekend, revealing plans to acquire Celestial AI in a deal valued at approximately $3.25 billion. This acquisition is positioned as a direct solution to a critical bottleneck in artificial intelligence infrastructure: the speed of data transfer between processing chips. While the strategic rationale was immediately applauded by several Wall Street firms, which issued substantial price target upgrades, the initial market reaction was cautious. In after-hours trading on Friday, Marvell’s shares declined by 3.6 percent.
Wall Street Applauds the Strategic Vision
The response from financial analysts was swift and largely positive, highlighting a perceived valuation gap. Research firms Piper Sandler and Roth Capital were among the most bullish, both raising their price targets for Marvell to $135. Deutsche Bank followed by increasing its target to $125. Even Goldman Sachs, which maintained a neutral stance on the stock, adjusted its outlook upward, moving its price target from $80 to $90.
This analyst optimism is rooted in Marvell’s evolving business model. The company is increasingly supplying custom-designed chips to major cloud service providers, including Amazon AWS. Revenue from this segment is projected to double by 2027. The Celestial AI technology is seen as a key differentiator against competitors like Broadcom, directly tackling the “Bandwidth Wall”—a major constraint on data movement within large-scale AI computing clusters.
The Core Technology: Photonic Fabric
At the heart of this acquisition is Celestial AI’s proprietary “Photonic Fabric” technology. This innovation uses light, rather than traditional electrical signals, to shuttle data between processors. The approach promises significantly faster transfer speeds alongside improved energy efficiency. Marvell’s management has provided concrete projections for the technology, forecasting it will generate annual revenue of $500 million by the end of 2028, with growth to $1 billion expected by the close of 2029.
Should investors sell immediately? Or is it worth buying Marvell Technology?
This strategic purchase aligns with Marvell’s recent strong performance. In its third fiscal quarter, the company reported a 38% year-over-year surge in data center-related revenue. Total revenue climbed to $2.08 billion, marking a 37% increase. Further underscoring confidence in its financial trajectory, Marvell also disclosed a new $5 billion share repurchase program.
Near-Term Caution Amid Long-Term Promise
Despite the enthusiastic analyst commentary, the immediate market reaction reflected a degree of skepticism. After closing the regular Friday session at $98.91, the stock slipped to around $95.35 in extended trading. This suggests investors are weighing the substantial cost of the acquisition and awaiting tangible progress on the integration of the two companies.
For the current fourth quarter, Marvell has provided guidance anticipating revenue of about $2.2 billion and earnings per share of $0.79. The company’s next quarterly results are scheduled for release on February 25, 2026. In the interim, market observers suggest the $90 price level may serve as a technical support zone. A sustained hold above that level could shift investor focus toward the newly established analyst price targets in the $135 range.
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