Semiconductor company Marvell Technology (MRVL) is acquiring privately held Celestial AI for as much as $5.5 billion U.S.
The deal includes an initial $3.25 billion U.S. in cash and stock. However, the purchase price could increase to $5.5 billion U.S. if Celestial AI hits certain revenue milestones.
The acquisition of Celestial AI is an aggressive move by Marvell and would provide it with complimentary technology to its semiconductor business.
Marvell says the purchase of Celestial AI could enable it to sell more microchips and parts to companies that are building artificial intelligence (A.I.) infrastructure.
Celestial AI is a start-up company focused on developing optical hardware that’s used to connect high-performance computers.
Optical connections are important because they tie together hundreds of microchips so that they can work as one to train and run the biggest A.I. models.
In its most recent funding round this past March, Celestial AI was valued at $2.5 billion U.S.
News of the deal comes as Marvell’s stock jumps 13% in premarket trading on Dec. 3 after the chipmaker reported third-quarter financial results that beat Wall Street’s expectations.
Marvell reported earnings per share (EPS) of $0.76 U.S. on $2.08 billion U.S. in revenue.
That was ahead of Wall Street forecasts that called for earnings of $0.73 U.S. and $2.07 billion U.S. of revenue.
Marvell’s management team said on their earnings call with media and analysts that they now expect data centre revenue to rise 25% during 2026.
Prior to today (Dec. 3), MRVL stock had declined 18% this year to trade at $92.89 U.S. per share.
