Marvell's Celestial AI Acquisition Garners Hold Rating from Benchmark, Long-Term Revenue Projections Detailed
Marvell Technology, Inc. (NASDAQ: MRVL), a key player in data infrastructure semiconductors, finds itself in the spotlight after finalizing its strategic acquisition of Celestial AI. The move, aimed at bolstering its optical interconnect capabilities for AI and high-performance computing, has prompted a fresh assessment from Wall Street.
On February 3, Benchmark analyst Cody Acree reiterated a Hold rating on the stock, maintaining the firm's financial outlook through fiscal year 2027. The rating reflects a cautious optimism, acknowledging the deal's long-term potential while noting the near-term financial dilution and execution risk inherent in integrating the new technology.
"The acquisition is a clear bet on the future of optical connectivity within AI clusters," Acree noted in the research update. "However, the revenue trajectory is a marathon, not a sprint." Benchmark's model anticipates initial revenue from Celestial AI's technology to begin in the second half of fiscal 2028, starting with a modest contribution before scaling to a projected $125 million in the fourth quarter, representing a $500 million annualized run rate.
By that point, analysts expect the new revenue to fully offset increased operating expenses and share dilution. Looking further ahead, Marvell projects Celestial AI's contribution to exit fiscal year 2029 at a $250 million quarterly run rate, or $1 billion annualized, signaling its expected role as a future growth engine.
The deal underscores the intense competition among chipmakers to solve the critical bottleneck of data movement in AI systems. Optical interconnects, which use light to transmit data, are seen as a promising solution for the massive bandwidth demands of next-generation data centers.
Market Voices: A Mix of Patience and Skepticism
Priya Sharma, Portfolio Manager at TechGrowth Capital: "This is a textbook strategic acquisition. Marvell isn't buying current revenue; it's buying a key technology for the next decade. The projected ramp to a billion-dollar run rate by FY29 is ambitious, but it aligns with the industry's roadmap. For long-term investors, this is about securing a seat at the optical table."
David Chen, Semiconductor Analyst at ClearView Research: "The Hold rating is prudent. The financials show this will be a drag on earnings for several quarters before potentially contributing. The market's patience will be tested. Success hinges on Marvell's ability to integrate Celestial's technology into its broader platform and win design slots against established competitors."
Marcus Thorne, Independent Investor & Commentator: "A billion-dollar run rate in 2029? That's a lifetime away in the fast-moving AI world. This feels like management asking for a blank check based on distant promises. Benchmark's Hold is too generous—this is a 'Wait and See' that could easily become a 'Sell' if integration stumbles or the technology fails to gain traction. Shareholders are funding a costly science project."
Eleanor Vance, Chief Technology Officer at a Cloud Infrastructure Firm: "From an engineering standpoint, this acquisition makes perfect sense. The industry desperately needs scalable, power-efficient interconnect solutions. If Celestial AI's technology is as good as touted, Marvell could become an indispensable supplier. The timeline seems realistic for such a fundamental shift in data center architecture."
As the AI hardware race intensifies, Marvell's bet on optical interconnects positions it for a future where data movement is as crucial as processing power. The coming quarters will be critical in demonstrating early technical wins and customer adoption.