- Record Revenue Growth: Marvell reported $2.075 billion in Q3 2026 revenue, a 37% YoY increase and 3% sequential growth, driven by strong data center demand.
- Data Center Dominance: Data center revenue surged 38% YoY to $1.52 billion, with AI and optical interconnects driving double-digit sequential growth in storage and switching.
- Celestial AI Acquisition: The $500M–$1B in annualized revenue from Celestial AI by 2028–2029 is expected to accelerate rack-scale photonic fabric adoption and earnings accretion.
- XPU Market Expansion: Marvell projects XPU attach market revenue exceeding $2 billion by fiscal 2029, supported by 18+ design wins and 10% of a $75B lifetime revenue opportunity.
- 2027 Revenue Guidance: Fiscal 2027 data center growth is forecast to outpace 25% YoY, with total revenue targeting $2.2 billion in Q4 and non-GAAP margins remaining stable at 59.5%–58.5%.
Data Center Business Driving Growth
The company's data center revenue was $1.52 billion, up 38% year-over-year. Marvell is seeing strong demand for its optical interconnect businesses, and its data center storage and switch businesses posted double-digit sequential revenue growth. The custom business is expected to grow by at least 20% next year, driven by its growing portfolio of design wins. Marvell has secured multiple design wins across several hyperscalers for custom foundational and Smart NICs.
Strategic Acquisition of Celestial AI
Marvell announced a strategic acquisition of Celestial AI, a photonic fabric platform provider, for an undisclosed amount, expected to close in the first quarter of next year. The acquisition is expected to generate $500 million in annualized revenue by the fourth quarter of fiscal 2028 and $1 billion by the fourth quarter of fiscal 2029. According to CEO Matthew Murphy, the acquisition will contribute significantly to Marvell's growth, with a focus on providing rack-level solutions.
Outlook and Valuation
Marvell forecasts total company revenue of $2.2 billion for the fourth quarter. For fiscal 2027, Marvell expects data center revenue to grow over 25% year-over-year. Analysts estimate next year's revenue growth at 41.9%. With a P/E Ratio of 34.87 and P/S Ratio of 11.09, the market has already priced in significant growth expectations. The EV/EBITDA ratio of 20.16 suggests that Marvell's valuation is reasonable compared to its earnings before interest, taxes, depreciation, and amortization.
Conclusion on Growth Prospects
Marvell's strong Q3 earnings and guidance for the fourth quarter demonstrate its growth momentum, driven by its data center business and strategic acquisition of Celestial AI. With a solid pipeline of design wins and a growing portfolio of custom products, Marvell is well-positioned to capitalize on the growing demand for AI and data center infrastructure.