New Delhi, India, December 3- Marvell to Buy Celestial AI became the top headline in the semiconductor world after the company announced a $3.25 billion deal that strengthens its push into advanced AI hardware. The move highlights Marvell’s ambition to dominate next-generation data center technology while accelerating the adoption of photonics. Moreover, it underscores the growing competition within the AI chip race.
The agreement includes $1 billion in cash and 27.2 million Marvell shares valued at $2.25 billion. It is expected to close in the first quarter of 2026. Investors reacted quickly, and Marvell’s stock surged 13% in after-hours trading. This rise followed months of pressure on the stock due to competition and concerns about a possible AI bubble. Even so, the announcement restored confidence in the company’s long-term strategy.
Marvell aims to gain a decisive edge by acquiring Celestial AI’s photonics technology. This technology uses light instead of electrical signals to connect chips. It moves data faster and reduces energy use. Because of these advantages, it holds major potential for next-generation cloud infrastructure. Marvell CEO Matt Murphy said the company will become a “silicon photonics powerhouse” once the deal closes. His statement reflects the company’s belief that photonics will define future AI hardware.
Industry experts say photonics could reshape large cloud environments. Murphy expects major cloud providers to begin deploying photonics technology by 2027 or 2028. Broader adoption should follow soon after. Furthermore, Marvell plans to integrate the technology into its next wave of infrastructure products. Company executives see a $10 billion market opportunity emerging from this shift.
The deal also includes a warrant issued to Amazon. This warrant allows Amazon to buy up to $90 million in Marvell stock based on future photonic product purchases through 2030. The exercise price sits near $87 per share. This agreement deepens Marvell’s ties with one of the world’s biggest cloud providers. It also signals Amazon’s confidence in the long-term promise of photonics technology.
Marvell forecasts $10 billion in revenue for its next fiscal year. It expects data center revenue to jump 25%. Custom chip revenue should grow 20% as demand from cloud giants like Amazon and Microsoft increases. For the current quarter, Marvell projects about $2.2 billion in revenue. That figure lands slightly above Wall Street expectations. Third-quarter revenue reached $2.07 billion, reflecting a gain of almost 37%, which matched analyst estimates.
Celestial AI is expected to contribute meaningful revenue in the second half of fiscal 2028. Marvell anticipates $500 million annually by the end of that year. The company expects that figure to reach $1 billion by late 2029. These projections highlight the long-term value that Marvell assigns to photonics. They also reveal how strongly the company believes in the technology’s commercial potential.
Industry analysts agree that the deal positions Marvell to challenge rivals such as Broadcom and Nvidia more aggressively. These companies are racing to design faster chips for AI workloads. The generative AI boom has intensified pressure on hardware developers. Firms must now create products that support massive models without draining power resources.
For Marvell, the acquisition represents a strategic bet on the future. By combining Celestial AI’s photonics expertise with its own chip capabilities, Marvell expects to shape the next era of data center design. Executives believe photonics will become standard in large AI deployments because it lowers energy use and improves performance. Therefore, the company sees the technology as essential to long-term growth.
Investors welcomed the move, and the sharp rise in Marvell’s stock reflects that optimism. The company’s upbeat outlook for 2026 has also boosted confidence. With AI driving unprecedented demand for advanced chips, Marvell now sits in a stronger competitive position.
This deal also mirrors wider trends across the semiconductor industry. Companies are investing heavily in energy-efficient technologies capable of supporting larger AI models. As computation needs escalate, these breakthroughs will be crucial for sustainable growth. Ultimately, Marvell’s decision signals strong confidence in photonics and its market potential. If the technology reaches its promise, Marvell could secure a leading role in the future of cloud computing.
