Marvell targets 25% data center revenue growth in fiscal 2027 as Celestial AI acquisition advances
Dec. 02, 2025 7:54 PM ET
AI-Generated Earnings Calls Insight
Earnings Call Insights: Marvell Technology, Inc. (MRVL) Q3 2026
Management View- CEO Matthew Murphy announced record revenue of $2.075 billion for the third quarter, a 3% sequential increase and 37% year-over-year growth, attributing this to stronger than forecasted demand in the data center end market. Murphy stated, "Momentum in our data center business remains strong with revenue growing 38% year-over-year, fueled by robust AI demand."
- Murphy detailed the acquisition of Celestial AI, describing it as "an entirely new disruptive technology, a photonic fabric platform purpose-built for next-generation scale-up interconnect." He emphasized, "This acquisition is the latest in a series of decisive moves to further strengthen our data center portfolio."
- Murphy highlighted that the acquisition is expected to close in the first quarter of next year, with Celestial AI's revenue projected to reach a $500 million annualized run rate in the fourth quarter of fiscal 2028, doubling to $1 billion by the fourth quarter of fiscal 2029. He added, "Celestial AI's first-generation product is a photonic fabric chiplet...delivering an unprecedented 16 terabits per second of bandwidth in a single chiplet."
- Murphy shared that the outlook for next fiscal year is "even stronger than the expectations we discussed in September," with data center revenue growth forecast now at more than 25% year-over-year and the communications and other end market expected to grow 10% next year.
- CFO Willem Meintjes stated, "Revenue in the third quarter was $2.075 billion, growing 37% year-over-year and 3% sequentially. Data center is our largest end market, contributing 73% of total revenue."
- Meintjes reported, "GAAP gross margin was 51.6%. Non-GAAP gross margin was 59.7%, an increase of 30 basis points sequentially." He also noted, "Non-GAAP earnings per diluted share was $0.76, reflecting year-over-year growth of 77%."
Outlook- Management forecast total company revenue for the fourth quarter at $2.2 billion at the midpoint. Murphy explained, "We expect this momentum to continue throughout next fiscal year and beyond."
- For fiscal 2027, Murphy stated, "We now expect Marvell's data center revenue to grow year-over-year by more than 25% next fiscal year."
- Meintjes projected, "We expect non-GAAP operating expenses to increase at roughly half the rate of the revenue growth next fiscal year." He added, "We expect our non-GAAP tax rate to move to approximately 12% next fiscal year."
- Regarding Celestial AI, Meintjes said, "Post closing, we expect the addition of Celestial AI to add approximately $50 million in annual operating expenses. We expect Celestial AI to start generating meaningful revenue in the second half of fiscal 2028."
Financial Results- Marvell delivered $2.075 billion in revenue in Q3, with data center revenue at $1.52 billion, representing 2% sequential growth and 38% year-over-year growth. Communications and other end market revenue reached $557 million, up 8% sequentially and 34% year-over-year.
- Non-GAAP operating margin was 36.3%, a 150 basis point sequential increase. Cash flow from operations was $582 million, up $121 million from the prior quarter.
- Inventory at the end of the quarter was $1.01 billion. The company repurchased $1 billion in stock through an accelerated program, plus $300 million via its ongoing program, and returned $51 million through dividends during the quarter.
- As of quarter-end, total debt stood at $4.5 billion, with cash and cash equivalents at $2.7 billion.
Q&A- Ross Seymore, Deutsche Bank: Asked about the path to $10 billion in revenue and alignment with long-term targets. Murphy responded, "You're absolutely in the ballpark when you add up the numbers I gave you on $10 billion for next year," and outlined that strong second-half growth and custom business doubling in fiscal 2028 are expected drivers.
- Harlan Sur, JPMorgan: Inquired about sub-3 nanometer design win pipeline and timing. Murphy noted, "Our product transition from where we are today with our lead XPU customer to the next one is baked into all the numbers I gave you, and...we got great visibility there."
- Tore Svanberg, Stifel: Sought clarification on Celestial AI revenue targets. Murphy confirmed, "The revenue targets and also the earnout that we're all going to drive for is all based on Celestial AI in totality," with PF chiplet products as the initial driver.
- Christopher Caso, Wolfe Research: Asked about diversification of Celestial AI revenue. Murphy explained, "We have strong engagement across the board, but...we have one Tier 1 hyperscaler...as a great teaching customer."
- Blayne Curtis, Jefferies: Queried about Amazon as the lead customer for photonic fabric. Murphy responded, "We did file Form 8-K talking about really an extension...adding another swim lane of photonic fabric products to the mix."
Sentiment Analysis- Analysts were positive in tone, frequently congratulating management on the acquisition and financial performance, and showed interest in forward growth and customer concentration. Pressing questions focused on visibility, diversification, and execution on long-term projections.
- Management exhibited a confident and optimistic tone, using phrases such as "we are positioned for several years of exceptional performance" and "we are playing offense in this company." Murphy repeatedly emphasized the company's visibility and momentum.
- Compared to the previous quarter, both analysts and management displayed more confidence and detail regarding long-term targets and the impact of the Celestial AI acquisition. Management provided more extensive forward guidance and explicit multi-year targets.
Quarter-over-Quarter Comparison- The current quarter featured the announcement of the Celestial AI acquisition, a significant strategic shift toward scale-up interconnect technology and photonic fabric platforms.
- Data center revenue growth expectations increased from mid-30% range in the prior quarter to over 25% for next year, with explicit mention of a path to 40% growth in fiscal 2028.
- Operating margins and EPS growth both improved sequentially and year-over-year, with cash flow and stock repurchases highlighted.
- The Q&A focused more on long-term revenue visibility, diversification, and strategic customer relationships than in the previous quarter.
- Management’s tone shifted to greater confidence in execution and the realization of multi-year goals, while analysts concentrated on validation of ambitious forecasts and the potential impact of new technologies.
Risks and Concerns- Management noted that the Celestial AI acquisition is subject to customary closing conditions and regulatory reviews in the United States.
- Meintjes pointed out that "the overall level of revenue and product mix will remain key determinants of our gross margin in any given quarter."
- No significant supply chain or tariff issues were identified in this quarter’s discussion.
Final Takeaway
Marvell’s third quarter showcased record revenue growth and a decisive move to accelerate its data center strategy through the acquisition of Celestial AI. The company projects strong momentum into fiscal 2027 and beyond, with data center revenue targeted to grow by more than 25% next year and significant revenue contributions from Celestial AI anticipated in fiscal 2028. Management’s confidence in multi-year growth is underpinned by robust demand signals, strong customer partnerships, and a comprehensive technology portfolio that positions Marvell for continued expansion in the evolving AI infrastructure market.
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