Marvell Technology is in advanced talks to acquire Lumentum Holdings, a maker of optical technology used in AI data centers, in a potential $83 billion deal. According to reports from Bloomberg, the discussions are expected to result in an announcement next week, though a final agreement has not been reached and the deal could still fall through. The timing and other details could also change, as reported by Bloomberg.
The acquisition would deepen Marvell's push into optical technologies to power artificial intelligence infrastructure. As reported by Bloomberg, Lumentum makes lasers and other optical technology for moving enormous amounts of data at high speeds, which underpins the AI boom by helping data centers and telecommunications companies move information between servers, facilities and other destinations. The deal would bring together two companies with an existing supplier relationship, as Marvell currently purchases lasers from Lumentum, potentially simplifying its supply chain.
The potential acquisition would rank among the 10 biggest technology and telecommunications mergers ever, according to Bloomberg reports citing compiled data. Lumentum has a market value of about $83 billion, compared with Marvell's $221 billion. By Business Engineer calculations, Lumentum is valued at approximately 27.5 times its $3.01 billion revenue from fiscal year 2026, while Marvell trades at about 17.5 times its $3.15 billion guide annualized to $12.6 billion. While Marvell has about $3.92 billion in cash and cash equivalents as of its latest quarter, Bernstein analysts told Reuters that an acquisition of that size would likely require additional financing and could present integration challenges. Investors reacted differently to the potential transaction, with Marvell shares falling about 9% after regular trading on Wednesday, while Lumentum gained about 11% in extended trading.
Marvell has emerged as one of the biggest beneficiaries of the AI spending boom, with its shares nearly tripling this year as demand for its custom AI chips and networking products surged. According to Reuters, the company raised its fiscal 2028 revenue forecast earlier this month to $20 billion from $15 billion, citing strong demand for its custom AI chips and networking products used in data centers. The potential acquisition would further Marvell's strategy of expanding into optical technologies used in AI infrastructure, following its earlier acquisition of photonics company Celestial AI in a $3.25 billion deal announced late last year. As reported by Business Engineer, Marvell already reports 79% of its revenue from data centers in its latest quarter, while Lumentum's annual report describes optical links becoming a primary means of connectivity for AI data centers.
Nvidia has also taken a $2 billion stake in Lumentum under an agreement that includes collaboration on photonics, as reported by Bloomberg. The acquisition underscores how the AI boom is driving dealmaking as companies race to build infrastructure capable of handling increasingly demanding workloads. Marvell has been expanding its investments in optical and photonic technologies, which use light rather than traditional copper wiring to move data faster and more efficiently, positioning itself strategically in the competitive AI infrastructure market. According to Business Engineer, Lumentum's business is concentrated with two unnamed end customers supplying 26.6% and 15.0% of fiscal 2026 revenue, while the company's risk factors describe supply constraints from constrained manufacturing capacity.
