Marvell Makes Another Move to Position for What’s Ahead
Expanding dollar content in a growing market is recipe we can get behind.
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Shares of Marvell Technology (MRVL) are zigzagging today, but the company is not slowing down. Following the early December announcement it would acquire Celestial AI for ~$3.25 billion, on Tuesday, Marvell said it entered into a definitive agreement to acquire XConn Technologies, which makes interconnect technology for artificial-intelligence infrastructure. For a reported price tag of ~$540 million, Marvell will expand its switching portfolio and augment its UALink scale-up switch team, which in plainer language means XConn will expand its networking portfolio as it doubles down even further on AI and data center hardware demand.
In announcing the transaction, Marvell revealed XConn is engaged with more than 20 customers and its switching products will contribute $100 million in revenue to Marvell’s fiscal 2028. The acquisition is expected to close early this year.
On top of that $100 million figure, let’s remember the guidance Marvell shared with its Celestial AI acquisition. As we wrote to you on December 3:
Marvell shared it sees meaningful revenue contributions from Celestial AI beginning in the second half of fiscal 2028, reaching a $500 million annualized run rate in the fourth quarter of fiscal 2028, doubling to a $1 billion run rate by the fourth quarter of fiscal 2029.
This tells us that Marvell’s early December guidance for its fiscal 2027, which ends in January 2027, is shaping up to be more conservative than not. That December guidance called for the Data Center segment revenue to grow by more than 25% and the Communications & Other revenue to be up 10%. Back-of-the-envelope math at the time implied fiscal 2027 revenue around $10 billion compared to the $8.18 billion expected for the 12 months ending this month.
As we think about that and the moves Marvell is making with these acquisitions, we’ll contemplate the comment from Lisa Su of Advanced Micro Devices (AMD) that we mentioned earlier today: AI going from 1 billion active users to 5 billion within five years.
More AI users are driving greater data consumption and network traffic as Marvell increases its AI and data center content. That’s a nice combination.
Between these two acquisitions, which tally just shy of $3.8 billion, Marvell will pay ~$1.325 billion in cash and the rest in stock. Based on the cash and equivalents on its books at the end of November, that should leave Marvell with about $1.4 billion or so.
At the time of publication, TheStreet Pro Portfolio was long MRVL.
