Marvell To Acquire Celestial AI For Up To $5.5 Billion

Marvell announced on Tuesday that it will acquire Celestial AI for a base consideration of $3.25 billion in cash and stock, with the total consideration potentially rising to $5.5 billion if Celestial achieves specified revenue targets.

The announcement accompanied Marvell’s third‑quarter results, which beat expectations, and the company said on its earnings call that it anticipates data‑center revenue to increase by 25% next year. Marvell’s shares climbed 13% in after‑hours trading on Tuesday. Despite the rally, the stock remains down 18% year‑to‑date in 2025, even as some peers such as Broadcom have seen substantial valuation gains tied to AI enthusiasm.

The acquisition is intended to strengthen Marvell’s semiconductor networking franchise by adding complementary optical interconnect technology. Celestial develops what it describes as a “photonic fabric” to link high‑performance computing systems; the startup was reportedly valued at $2.5 billion in a March funding round, and Intel CEO Lip‑Bu Tan joined its board in January. Marvell said Celestial’s technology could help the company sell additional chips and components to firms investing heavily in AI infrastructure.

Optical links are increasingly important for advanced AI systems because they enable higher data throughput and longer cable runs than traditional copper connections, albeit at higher cost. Marvell indicated the initial use case for Celestial’s technology will be to connect systems built around “large XPUs,” custom AI processors used by organizations making substantial infrastructure investments. The company added that Celestial’s optical solutions could be integrated into custom chips and, subject to customer demand, incorporated into switches and other related components.

Amazon Web Services Vice President Dave Brown said Marvell’s acquisition of Celestial will “help further accelerate optical scale‑up innovation for next‑generation AI deployments.” Under the terms disclosed, the maximum additional consideration becomes payable if Celestial achieves $2 billion in cumulative revenue by the end of fiscal 2029. The transaction is expected to close early next year.

In its quarterly financials, Marvell reported earnings of $0.76 per share on $2.08 billion in revenue, versus LSEG consensus of $0.73 on $2.07 billion. The company projected fourth‑quarter revenue of $2.2 billion, slightly above LSEG’s $2.18 billion estimate.