(Bloomberg) — Marvell Technology Inc. rallied in late trading after reassuring investors that its custom chip-design unit is winning repeat orders, signaling continued growth as the company benefits from runaway spconcludeing on AI computing.
On a post-earnings conference call with analysts, Marvell stated it’s now more bullish about revenue growth next year and predicted that custom chip sales will increase 20%. Large customers have renewed orders, and Marvell stated 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 $3.25 billion, a shift it stated would bolster the artificial ininformigence push. On the call, Chief Executive Officer Matt Murphy indicated that Marvell revenue could reach $10 billion in the next fiscal year, well above the $9.47 billion predicted by analysts.
“We’re very optimistic about our outsee over the next couple of years,” he stated.
The remarks sent the shares up more than 15% in late trading, reversing earlier declines. The stock had been down 16% this year through Tuesday’s close.
Marvell has attempted to position itself to benefit from the AI spconcludeing boom — with mixed success. Though it’s assisting cloud-computing companies like Amazon.com Inc. design custom chips to handle AI, those products aren’t as widespread as Nvidia Corp. processors.
The latest commentary suggests that Marvell is building some headway. On the call, the company stated it expected “accelerated growth” in its custom chip business. Recent customer wins include an “emerging hyperscaler” — an industest term that describes a large data-center operator.
Marvell also forecast revenue of roughly $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 stated, compared with an average prediction of 59.5%. Marvell forecast earnings of 79 cents a share, matching the estimate.
In the Celestial AI deal, Marvell is offering $1 billion in cash and stock valued at $2.25 billion, according to a separate statement. Under the agreement, Celestial AI investors stand to be paid as much as $2.25 billion in additional Marvell shares if the business hits certain revenue tarobtains.
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 shift data, assisting artificial ininformigence systems run more quickly.
The startup, which completed a $255 million funding round in August, was backed by Fidelity Management & Research Co., BlackRock Inc. and Advanced Micro Devices Inc. Intel Corp. Chief Executive Officer 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 calconcludear quarter of 2026. The additional payouts launch to take effect if Celestial AI reaches cumulative revenue of at least $500 million by the conclude of Marvell’s fiscal 2029. The full amount will be paid if the cumulative revenue tops $2 billion by that point.
The Information previously reported that Marvell was in talks to acquire Celestial AI.
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