$MRVL · The Motley Fool · 2026-11-02

Marvell aims to reach a valuation of one trillion dollars.

Breaking news this morning: Marvell has officially made an offer to acquire Lumentum, a deal that values the company at $115 billion.

I want to shift the conversation to you about Marvel, not Marvel, Marvel. What is she doing, and why is she so interested in making one of the biggest deals ever for another company?

Marvell is the company that Nvidia CEO Jensen Huang said earlier this year could be the next trillion-dollar company. Marvell designs and manufactures semiconductors and data infrastructure solutions that transmit, store, process, and secure digital data .

Of course, Marvell is famous for its application-specific integrated circuits, or ASICs. And its XPU processors, and the networking chips used by cloud computing service providers.

Digital signal processors (DSPs) are a key part of their business , and their secret weapon, so to speak. These are specialized silicon chips used to convert data into pure electrical pulses before they reach the laser.

Marvell excels at designing custom AI accelerators , specifically tailored for companies like Alphabet and AWS that want their own hardware.

I think Marvel sees enormous potential. As you know, they are striving to develop their high-speed optical technology to compete with companies like Broadcom.

I believe they see Lumentum as a way to achieve this new and renewed growth , and perhaps become an alternative to cloud computing giants who may not want to be associated with Broadcom's system.

I'm glad you mentioned Broadcom, because Marvell specializes in manufacturing custom chips. It is not the only player in the market. In fact, Broadcom is the biggest player.

This deal, assuming it goes through—which is not expected to happen anytime soon—will enable Marvel to do that as well. So it creates a genuine alternative to Broadcom, and this is a simplified way of explaining what this deal offers them.

I believe this deal is designed to help them compete strongly with companies like Broadcom. One thing we consistently observe is that the growth of artificial intelligence is negatively affected by actual manufacturing capacity , not necessarily by design specifications .

Therefore, integrating Lumentum's factories into the Marvell ecosystem will enable them to continue shipping the products they need to their customers, helping them reduce waiting times for their major customers, including cloud computing giants and others.

So, I think that's their main objective right now. I believe that is the focus of this deal, and I am excited to talk about some of its terms, because we are not seeing much activity in acquisitions in this area at the moment .

The mergers and acquisitions market has not been booming over the past few years , and we are now in a time when we are witnessing a major collapse in AI stocks , so this is an interesting time to announce an acquisition of this kind.

As you know , with a deal of this size, we had to provide an in-depth analysis, and when we talk about $115 billion, as you might expect, Marvel doesn't have that huge amount of money frozen in a bank account.

How does Marvel intend to accomplish this task? In this deal, each Lumintum shareholder will receive 4.5 shares of Marvell Technology stock for each share they own in Lumintum.

The deal is valued at one hundred and fifteen billion dollars, a figure we have mentioned several times.

Now, 4.5 shares of Marvel are worth $857. As you know , the stock price has fallen to about 25% lower than it was before the deal rumors spread. This is the essence of the risk in the entire stock deal .

The price is not fixed in dollars. If Marvell's stock price were to halve, which I don't think would happen, the actual acquisition price would halve.

In this case, as I mentioned, an all-stock deal was the only realistic option. But it creates a kind of ongoing risk. It's not as if Lumintum shareholders can celebrate a profit of $1,100 per share. Things don't go that simply in all stock deals.

Yes, I think you're right, Matt. I mean, if you opt for an all-equity deal, Marvell can preserve its cash reserves and avoid costly borrowing. That was almost mathematically impossible.

It is clear that there is a reduction in shareholders' stakes. Marvell is issuing a large quantity of new shares to give Lumentum shareholders 33% of the merged company if the deal is completed. This is another thing to consider.

Marvell is acquiring Lumintum at a much higher price, a very high price based on the expected growth in the field of artificial intelligence.

But it is important to point out that this high price is significant. Marvell, as you know, is a design company without factories, so its physical operating costs were low.

As we have seen, the pressure we have witnessed on Marvell's stock since the announcement of the deal shows mixed reactions in the market. But we will also see the phenomenon of investment funds short selling shares of the acquiring company and buying shares of the target company, i.e., Marvell and Lumintum respectively, to take advantage of the price difference in the deal.

This may lead to some resistance at the price, so keep that in mind if you own either of these stocks. It will also be interesting to see if they announce any further acquisitions in this area .

If so, these secondary chip design companies, perhaps not wanting to be left behind, are researching and exploring the options available in this field.

I would also like to point out that there is a relatively long timeframe for completing the deal. The deal is not expected to be completed until the first half of 2028. There is likely to be a somewhat complicated regulatory path, and even then, if approved, this type of merger takes time to process.

Therefore, we may see Marvell stock trading sideways for a while . There are many regulatory approvals and integration plans that await us, which should also be taken into account if you own one or both of these stocks.

What do you think will be the impact of this on Marvell stock, which represents an ongoing investment opportunity ? You just mentioned that it might trade sideways, is that your personal opinion?

Is this what you expected, and why specifically?

Yes, I think we may see the stock trading sideways in the near term, or even performing closer to a loss, so to speak, during this consolidation period. I think that if the merger goes ahead, to be clear, Marvell is an excellently managed company with a strong financial position , and I actually think this deal makes sense for them.

I think there are some risks that we have discussed, but the nature of the deal, as we mentioned, and the complexities of the merger process, may affect the share price in the near term.

If the deal goes through successfully, I think we will see a company that becomes an increasingly strong competitor as we enter 2030 and beyond, much more so than it is now, and that in itself is a strong indicator.

I believe this will inevitably lead to revenue and profit growth, and this in turn will lift all companies. Therefore, I don't consider this a long-term concern, but rather something Marvel shareholders should take into account.

Yes, Matt, same question. Assuming everything goes smoothly, Marvell's stock price is available to buy, sell, or hold. This is a huge assumption that everything will go smoothly .

The company's deal is scheduled to be completed in the first half of 2028. Companies are usually a little optimistic. So, I would say, at best, we are about 18 months away from completing the deal.

Marvell's stock was negatively affected by this deal, falling by 25% despite no material change occurring. Assuming everything goes well, the company will become more efficient than it is now .

So, yes, my positive expectation is that you will now get, as I mentioned, two excellent companies merging, which are among the biggest beneficiaries of the AI infrastructure boom, and you will get them together at a discount of approximately 25% .

This is the optimistic scenario. Now , there are a lot of things that need to go right. Both companies rely heavily on continued high spending on artificial intelligence. Well, over the next eighteen months, you know, that's not a given.

We may see a decline in the performance of some companies. Therefore, I cannot recommend purchasing now due to the timeline .

But it seems that if you were a fan of Marvel two weeks ago, you'll like it even more today, that's what I conclude. We will be monitoring the growth of both companies in the coming chapters, and this is what we will discuss in the "Questions and Answers" section .