(Dec 3): Marvell Technology Inc rallied after reassuring investors that its custom chip-design unit is winning repeat orders, signalling continued growth as the company benefits from runaway spending on artificial intelligence (AI) computing.
On a post-earnings conference call with analysts on Tuesday, Marvell said it’s more bullish about revenue growth next year and predicted that custom chip sales will increase 20%. Large customers have renewed orders, and Marvell said there won’t be a repeat of previous “air pockets,” when sales in that unit have declined.
The company also announced plans to acquire startup Celestial AI for at least US$3.25 billion, a move it said would bolster the AI push. On the call, chief executive officer Matt Murphy indicated that Marvell revenue could reach US$10 billion in the next fiscal year, well above the US$9.47 billion predicted by analysts.
“We’re very optimistic about our outlook over the next couple of years,” he said.
The remarks sent the shares up as much as 9.9% after markets opened in New York on Wednesday, their biggest intraday gain since Oct 31. The stock had been down 16% this year through Tuesday’s close.
Marvell has tried to position itself to benefit from the AI spending boom — with mixed success. Though it’s helping cloud-computing companies like Amazon.com Inc design custom chips to handle AI, those products aren’t as widespread as Nvidia Corp processors.
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The latest commentary suggests that Marvell is making some headway. On the call, the company said it expected “accelerated growth” in its custom chip business. Recent customer wins include an “emerging hyperscaler” — an industry term that describes a large data-centre operator.
Marvell also forecast revenue of roughly US$2.2 billion in the fiscal fourth quarter, which runs through January, in line with the average Wall Street projection.
Adjusted gross margin will be about 59% in the period, the company said, compared with an average prediction of 59.5%. Marvell forecast earnings of 79 cents a share, matching the estimate.
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In the Celestial AI deal, Marvell is offering US$1 billion in cash and stock valued at US$2.25 billion, according to a separate statement. Under the agreement, Celestial AI investors stand to be paid as much as US$2.25 billion in additional Marvell shares if the business hits certain revenue targets.
Celestial AI, a Santa Clara, California-based startup founded in 2020, offers a technology called photonic fabric that connects components within AI infrastructure. It relies on light to more efficiently move data, helping AI systems run more quickly.
The startup, which completed a US$255 million funding round in August, was backed by Fidelity Management & Research Co, BlackRock Inc and Advanced Micro Devices Inc. Intel Corp CEO Lip-Bu Tan also was an investor, and he joined the company’s board earlier this year.
The takeover is slated to close in the first calendar quarter of 2026. The additional payouts begin to take effect if Celestial AI reaches cumulative revenue of at least US$500 million by the end of Marvell’s fiscal 2029. The full amount will be paid if the cumulative revenue tops US$2 billion by that point.
The Information previously reported that Marvell was in talks to acquire Celestial AI.
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