Marvell Technology Bolsters AI Infrastructure with Strategic Acquisition

In a move to enhance its capabilities for next-generation artificial intelligence data centers, Marvell Technology has finalized the purchase of Celestial AI. The transaction, which closed on February 2, 2026, is centered on strengthening Marvell's position in optical connectivity—a critical field where bandwidth and latency are increasingly decisive for competitive advantage. However, the financial benefits of this deal are projected to materialize over an extended horizon, with significant revenue not anticipated for several years.

The acquisition was structured primarily as a stock-based transaction. Marvell issued approximately 24.6 million unregistered common shares to the former owners of Celestial AI.

An additional earn-out provision is included in the agreement. This means that if Celestial AI achieves specific cumulative revenue targets by the conclusion of Marvell’s fiscal year 2029, additional Marvell shares may be issued. Consequently, the final purchase price remains partially contingent on the operational performance of the acquired unit.

Key projections and impacts outlined by Marvell include:

• Revenue Generation: Expected to commence in the second half of fiscal year 2028.
• Growth Targets: An aim to reach an annualized run-rate of $500 million by Q4 FY2028, scaling further to $1 billion by Q4 FY2029.
• Cost Impact: The integration is estimated to add roughly $50 million in incremental annual non-GAAP operating expenses.
• Balance Sheet Effect: The transaction results in a lower cash position and a higher share count.

The Strategic Imperative Behind Optical Interconnects

The strategic rationale for this acquisition is directly tied to the demands of large-scale AI. These complex systems require vast amounts of data to be moved rapidly and efficiently between components within and across data centers. Celestial AI’s Photonic Fabric™ technology is designed to address this need. By integrating this optical interconnect solution, Marvell aims to fortify its portfolio and solidify its standing with data center clients.

Should investors sell immediately? Or is it worth buying Marvell Technology?

The timing aligns with broader market dynamics. The sector encompassing data processing, data centers, and AI is viewed in 2026 as a primary growth engine for the semiconductor industry. This has intensified the race to establish early dominance in infrastructure bottlenecks, such as advanced connectivity technologies.

Market Response and Upcoming Catalysts

Analyst reactions on February 3, 2026, reflected a blend of long-term optimism and near-term caution. While the long-term positive assessment of Marvell’s strategy was largely maintained, several analysts concurrently lowered their price targets. The reasoning cited was the extended timeline before meaningful revenue contribution begins, contrasted with the immediate cost increases from integration.

This cautious sentiment is also visible in the stock's recent performance, which has declined by 26.22% over the preceding 30 days.

The next significant milestone for investors will likely be Marvell’s upcoming quarterly report, expected around March 4, 2026. Management’s commentary regarding the integration timeline, cost management, and revenue expectations will be scrutinized closely.