Quick Read
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Marvell fell 13% on dilution fears while Lumentum surged 6% after Bloomberg reported advanced talks to acquire the optical maker sold out through 2029.
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Coherent held flat and Applied Optoelectronics dropped 3%, as rivals don’t share Lumentum’s premium, though a disclosed deal price could reset optical sector valuations.
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Traders are rewarding the target and punishing the buyer as Marvell Technology (NASDAQ:MRVL) reportedly closes in on a deal to lock up scarce optical components for AI data centers, while rival optics names aren’t getting a sympathy bid. Marvell stock is at $220, down 13% in morning trading.
Lumentum (NASDAQ:LITE) stock is at $965, up 6%, as the reported target. Looking further at the peer group, Coherent (NYSE:COHR) stock is at $240, up 0.2%.
Inside the Reported Marvell Bid for Lumentum
Bloomberg reported late on October 28, citing people familiar with the matter, that Marvell is in advanced talks to buy Lumentum and that a deal could be announced as soon as next week. No final agreement has been reached, and the terms could still change. The talks were reported after the close of regular trading, setting up the sharp moves in both names.
Lumentum makes lasers, optical components and networking systems for cloud and AI data centers, and demand for its indium-phosphide technology is running well ahead of supply. Michael Hurlston, the company’s CEO, has previously said Lumentum is essentially sold out of certain products into 2029 and is shipping well short of demand. That scarcity is what makes the company so attractive to a chip designer chasing AI connectivity.
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Marvell, a fabless chip designer focused on data infrastructure, recently expanded its custom silicon partnership with Alphabet (NASDAQ:GOOGL) unit Google, including a warrant for Google to acquire up to 7% of Marvell shares tied to revenue milestones. Earlier this year, the company completed its acquisition of Celestial AI, which works on photonic interconnects. On its August 27 earnings call, Marvell’s management noted customers are actively planning scale-up optics deployments starting as early as next year. A combination with Lumentum could give Marvell access to optical components that can replace copper interconnects and ease constraints in AI clusters.