Reporting results for its fiscal third quarter 2026 on Tuesday, the chip maker posted record revenue of $2.08 billion, up 37% from a year earlier and 3% sequentially, driven by relentless demand from cloud data centers. Non-GAAP earnings per share rose 77% to $0.76, topping the midpoint of guidance as operating leverage kicked in.
Data center chips once again did the heavy lifting, contributing 73% of sales, or roughly $1.52 billion, up 38% year over year. Communications and other markets supplied the remaining 27%, with revenue of $557 million, up 34% from a year earlier as customers worked down excess inventory and Marvell’s refreshed portfolio gained traction.
For the current quarter, management guided revenue to $2.2 billion, plus or minus 5%, implying about 21% growth from a year earlier—or roughly 24% if the divested automotive-Ethernet business is excluded. Data center revenue is expected to grow in the high single digits sequentially and about 20% year over year.
A $10 Billion Ambition
On the call, Chief Executive Matt Murphy went well beyond the usual one-quarter view, sketching a multi-year growth arc anchored in AI infrastructure. Adding up his segment-level growth bridges for fiscal 2027, analysts quickly converged on an implied revenue target “around $10 billion” for next year—an assessment Murphy called “absolutely in the ballpark” and “motivational” for the team.
The company expects its data center business to grow more than 25% next fiscal year, powered by optical interconnects, custom accelerators and “XPU-attach” devices such as smart NICs and CXL memory expansion chips. Communications and other markets are projected to grow about 10%. Looking one year further, Marvell sees data center revenue jumping roughly 40% in fiscal 2028, implying around 30% total company growth.
That confidence rests partly on visibility: Murphy said the company already holds purchase orders covering its forecast for a next-generation 3-nanometer AI XPU at a leading hyperscale customer, with 2-nanometer designs lining up behind it.
Buying a Photonic Future
The headline surprise, however, was Marvell’s agreement to acquire Celestial AI, a privately held start-up whose “photonic fabric” aims to replace short-reach copper links with co-packaged optical connectivity inside AI systems.
Celestial’s first product, a “photonic fabric chiplet,” integrates drivers, TIAs, SerDes and optical components into a single 16-terabit-per-second chiplet—ten times the capacity of today’s 1.6-terabit ports used in scale-out networking, according to Marvell. The platform promises more than twice the power efficiency of copper, nanosecond-class latency and the thermal robustness needed to sit directly atop multi-kilowatt XPUs in a 3D package, freeing scarce die-edge area for high-bandwidth memory.
Celestial has already landed a flagship design win at one of the world’s largest hyperscalers, which plans to co-package the chiplets into both its custom accelerators and scale-up switches. Marvell extended an existing warrant and strategic agreement with Amazon Web Services to add a new “swim lane” for photonic fabric products, underscoring the depth of that relationship.
Management pegs the merchant market for scale-up switches at about $6 billion by 2030, with optical interconnect content of similar magnitude on both sides of the link—more than a $10 billion incremental opportunity when counted across XPUs and switches. Marvell’s base case calls for Celestial AI to reach a $500 million annualized revenue run rate by the fourth quarter of fiscal 2028 and $1 billion a year later, with meaningful revenue starting in the back half of fiscal 2028.
The deal, funded with cash and stock, is expected to add roughly $50 million in annual operating expenses and become accretive to non-GAAP earnings once volume ramps. Marvell doesn’t plan to take on additional debt.
Cash, Margins and the Buyback Machine
Financially, Marvell is turning AI enthusiasm into cash. Non-GAAP gross margin improved to 59.7%, up 30 basis points sequentially, while non-GAAP operating margin expanded 150 basis points to 36.3%. Operating cash flow hit a record $582 million in the quarter. The company ended the period with $2.7 billion in cash and $4.5 billion of debt, for a net debt-to-EBITDA ratio of just 0.58 times, even after returning $1.35 billion via buybacks and dividends and executing a $1 billion accelerated repurchase program.
Murphy’s message to investors was clear: Marvell intends to play offense. With a widening footprint that now spans optical links, custom accelerators, memory attach, and soon photonic fabric at the heart of the AI rack, the company is betting that the data center build-out has years to run—and that its own growth can continue to outpace it.
