We're Upping Our Marvell Price Target and Reiterating Our Rating
Let's break down how program wins are poised to accelerate in the coming quarters and details on the announced Celestial AI acquisition.
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This morning’s economic data is out and digested, Treasury Secretary Bessent’s Deal/Book interview has concluded, and we're waiting for the one with Anthropic CEO Dario Amodei. So, let’s turn our focus to Marvell Technology (MRVL) .
While MRVL shares are off their highs from early this morning, they are still climbing faster than the broader market. The catalyst for that the shares, as well as a number of price target increases across Wall Street, was Marvell’s quarterly earnings report last night and the announcement that it will acquire Celestial AI, a move that should accelerate its AI and data center strategy.
Our response to what we learned from these events is to increase our MRVL price target to $140 from $125. Based on the progress for the company’s custom AI silicon programs and related digital infrastructure spending in the coming quarters, we’ll revisit that target as needed.
On November 25, we upgraded MRVL shares to a One rating. While the shares have climbed nearly 19% since then, given the upside to our revised target and the prospects discussed below, we continue to rate MRVL shares a One.
Marvell’s October Quarter
Marvell reported EPS of $0.76 for its October quarter, up more than 75% year over year and ahead of the $0.74 market consensus. Revenue for the three months came in at $2.07 billion, matching the market forecast, and rose 38% compared to the year-ago quarter.
The company’s largest segment, Data Center (73% of revenue), posted a 38% year-over-year gain in revenue for the quarter, better than the mid-30% guidance offered by Marvell back in August. On a sequential basis, Data Center rose 2%, but that too was in keeping with management’s guidance, which also called for a larger ramp in Data Center in the final quarter of the year (more on that below).
Earlier this week, we reminded folks that Marvell’s remaining business units would be consolidated into a new Communications & Other segment (27% of total revenue), which climbed 34% year over year and 8% quarter over quarter. Per management, excluding revenue from the divested automotive Ethernet business, the implied revenue growth for the segment during the quarter would be closer to 20% sequentially and 50% year over year.
The biggest gains inside that segment were found in the enterprise networking and carrier infrastructure businesses, which soared by more than 55% and 95%, respectively, compared to year-ago levels. We see that confirming the expected pickup in digital infrastructure spending, as well as reaffirming recent comments from Cisco (CSCO) and Dell (DELL) . The consumer end market was essentially flat, and the automotive/industrial market was impacted by the disposition of the automotive Ethernet business, but at a combined 8% of total revenue, those businesses are relatively small potatoes.
During the quarter, Marvell executed its $1 billion accelerated stock repurchase program in addition to repurchasing $300 million of stock through its ongoing buyback program. When Marvell files its 10-Q for the quarter, we’ll dig a bit deeper into its outstanding share count, which is expected to average 857 million on a fully diluted basis compared in the current January 2026 quarter compared to 879.9 million in the January 2025 quarter.
Marvell’s Outlook
For the current quarter, Marvell sees its top-line hitting $2.1 billion-$2.3 billion with EPS of $0.74-$0.84. Once again, those figures bookended the market consensus of $2.18 billion and $0.79, but they also equate to top-line growth of more than 20% with EPS growth at a faster level, more than 30%. Getting a bit granular, Data Center revenue is expected to grow sequentially in the high single digits, roughly 20% year over year. Communications & Other is slotted to grow in the low single digits sequentially, and near 40% on a year-over-year basis, adjusted for the former automotive Ethernet business.
Tucked inside that Communications & Other guidance, Marvell’s enterprise networking business is expected to reach an annualized revenue run rate of approximately $1 billion, with the rebound in that market and customer inventory levels returning to more normalized levels.
Looking to the company’s fiscal 2027, which ends in January 2027, Marvell’s initial guidance calls for the Data Center segment revenue to grow by more than 25% and the Communications & Other revenue to be up 10%. Some back-of-the-napkin math implies around $10 billion in revenue during fiscal 2027, compared to the $5.8 billion delivered in fiscal 2025. Fueling that expected increase is the quickly growing interconnect business, which should grow faster than overall cloud capital spending next year, and the continued ramp in Marvell’s custom AI silicon business, which on its own should be up ~20% in fiscal 2027.
That business will be back-end weighted, which comes as no major surprise considering Amazon’s (AMZN) Trainium 3 AI chips are only now widely available. As we move into 2026, we’ll be looking for updated facts and figures for Marvell’s custom AI silicon program as well as comments tied to its efforts with Google (GOOGL) , Microsoft (MSFT) , and Meta (META) .
Going one step further, Marvell signaled that based on its program wins, it already sees its Data Center revenue growth accelerating above fiscal 2027’s 25% growth target. For a company that typically guides one quarter at a time, Marvell is sharing far more than usual, an indication that suggests its program visibility has improved.
The Celestial AI Acquisition
Following the divestiture of Marvell’s automotive Ethernet business, the company continued to lean into the Data Center market with its announced acquisition of Celestial AI. We touched on this rumored transaction in Tuesday’s Portfolio video, but the transaction has now been formally announced and is expected to close by March 2026.
The price tag is upfront consideration valued at ~$3.25 billion, composed of $1.0 billion in cash plus ~ 27.2 million MRVL shares. Marvell will pay an additional 27.2 million shares, up to $2.25 billion, provided certain revenue milestones are achieved. The first milestone, representing one-third of the earnout consideration, will be achieved if Celestial AI reaches cumulative revenue of at least $500 million by the end of Marvell’s fiscal year 2029 (January 2028). The full earnout would be paid if Celestial AI’s cumulative revenue by the end of Marvell’s fiscal year 2029 exceeds $2.0 billion.
What is Marvell getting for that price?
Celestial AI is the creator of the Photonic Fabric, an optical interconnect technology platform for AI computing systems that is expected to accelerate Marvell’s connectivity strategy for next-generation AI and cloud data centers. Celestial AI's first-generation product is a photonic fabric chiplet (PF chiplet), which integrates all the required electrical and optical components.
Before being acquired by Marvell, Celestial already secured a major design win with one of the world's largest hyperscalers, which plans to use Celestial AI's PF chiplets in its next-generation scale-up architecture. It was also “engaged” with multiple hyperscalers and ecosystem partners who recognize the disruptive potential of this technology. We won’t go counting our Celestial AI chickens just yet, but that suggests Marvell should be reaping some nice benefits in the coming years.
With that in mind, 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.
At the time of publication, TheStreet Pro Portfolio was long MRVL, AMZN, GOOGL, MSFT and META.
