Marvell Technology ((MRVL Quick QuoteMRVL - Free Report) ) delivered a strong earnings report yesterday, beating analyst expectations on both revenue and EPS and sending shares nearly 6% higher today in trading. The company posted $2.075 billion in revenue, up roughly 37% year over year, and reported non-GAAP EPS of $0.76, modestly ahead of consensus. The beat comes after a stretch of uneven performance, and it appears to have reassured investors that Marvell is reestablishing its footing as a focused, niche, but increasingly important, player in the AI infrastructure ecosystem.

The bigger story, however, is strategic. Alongside earnings, Marvell announced it will acquire Celestial AI, a photonics startup developing optical-interconnect technology designed for high performance AI and cloud data centers. Photonics has rapidly emerged as one of the hottest new frontiers in AI infrastructure, enabling systems to shuttle data using light instead of copper, dramatically improving bandwidth, efficiency, and latency. By folding Celestial into its portfolio, Marvell is clearly doubling down on the next major wave of data center architecture.

This move reshapes Marvell’s positioning. After divesting a legacy automotive networking business earlier this year, the company is now fully concentrated on core AI connectivity—joining Nvidia ((NVDA Quick QuoteNVDA - Free Report) ) and Broadcom ((AVGO Quick QuoteAVGO - Free Report) ) on the semiconductor side, while stepping into the photonics arena alongside Coherent Corp ((COHR Quick QuoteCOHR - Free Report) ) and Lumentum ((LITE Quick QuoteLITE - Free Report) ). With this acquisition, Marvell is aiming to become one of the few companies straddling both silicon and photonics, a combination that could prove critical as AI systems scale going forward.

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Marvell Joins the Photonics Race with Celestial AI

With the acquisition of Celestial AI, Marvell is stepping directly into one of the fastest-emerging frontiers in AI infrastructure: photonics. Celestial’s “Photonic Fabric” technology enables data to move across AI systems using light rather than copper, dramatically increasing bandwidth and reducing power consumption—two of the biggest bottlenecks in modern data centers.

This move puts Marvell alongside established photonics leaders such as Coherent and Lumentum, both of which supply lasers, optical engines, and high-speed interconnect components that power today’s AI-scale networks. While Marvell has traditionally been known for networking silicon and custom ASICs, acquiring Celestial positions it squarely within the optical-interconnect market that Coherent Corp and Lumentum have helped build.

The strategic rationale is clear: as hyperscalers shift toward silicon photonics and external light-source architectures to support ever-larger GPU and XPU clusters, the line between semiconductor and photonics companies is blurring. By combining its existing data-center silicon portfolio with Celestial’s photonic-interconnect technology, Marvell is aiming to become one of the few players capable of delivering a end-to-end connectivity platform.

Marvell Shares Jump on Earnings Upgrades

Marvell currently boasts a Zacks Rank #2 (Buy), supported by a some minor upward earnings revisions. I would not be surprised to see a new wave of upgrades coming soon though, as the Celestial acquisition could make a significant contribution to the company’s top and bottom line, by expanding the company’s market significantly in one of the hottest spots of the industry.

The company’s long-term outlook is also quite compelling. EPS is projected to grow 38.18% annually over the next three to five years, an impressive growth rate. Despite that growth, the stock trades at a one-year forward earnings multiple of 32.8x, giving Marvell a PEG ratio of 0.86, a valuation considered discounted relative to its earnings potential.

Should Investors Buy Shares in MRVL?

Marvell’s latest results and its acquisition of Celestial AI put the company on a stronger strategic footing, positioning it squarely at the intersection of semiconductors and photonics. This is in a similar, but also unique direction compared to industry giants Nvidiaand Broadcom.

What makes Marvell interesting is its focused, niche exposure. Rather than competing directly in training chips, Marvell is building a specialized connectivity platform, now enhanced with Celestial’s photonic-interconnect technology, that aligns with where AI data center architectures are heading.

With accelerating growth, a discounted PEG ratio, and a larger addressable market, Marvell offers a more targeted way to participate in the same long-term AI infrastructure trends driving Nvidia and Broadcom, but at a smaller scale and potentially higher growth rate.