Marvell Shares Drop 10% on Lumentum Acquisition News

Shares of Marvell (NASDAQ: MRVL) fell by 9.97% to $226.55 in the after-hours session on October 28 following reports of the final stage of acquiring Lumentum (NASDAQ: LITE). Marvell's market cap at closing was $226.15 billion, while Lumentum's was $82.78 billion: the target is 36.60% of the buyer's size, raising questions about financing. Conversely, LITE rose by 5.54% from $913.95 to $964.45.

Lumentum produces optical and photonic components for communication and data centers – the acquisition will strengthen Marvell's position in AI infrastructure. Since the beginning of the year, Marvell's stock has gained 181.52%. The deal was preceded by the acquisition of photonic Celestial AI at the end of 2025.

Forecasts

On October 6, at Investor Day, Marvell raised its revenue forecast for FY2028 (12 months ending January 30, 2028) to approximately $20 billion: $2 billion more than the August forecast of $18 billion and 66.67% more than about $12 billion for the current fiscal year. In data centers, the company expects 60% growth in FY2027 compared to the previous 50%; in the second quarter, the segment grew by 46% year-over-year. The long-term target was raised from $15 billion (2024 forecast for 2029) to $18 billion (October 2026).

Risks

The business is concentrated on a few clients, and the AI boom seems increasingly unstable. Energy remains a bottleneck: Amazon was unable to install all the purchased chips. Ed Zitron points out that Microsoft mixes AI and regular data centers in its reporting and has not installed more than 50% of the purchased equipment. Even with the extended lifespan of GPUs, it is 6 years (72 months). Slowing Nvidia sales could hit the entire industry. Additional pressure includes layoffs, rising CapEx, and inflation.