Marvell (MRVL): A High-Conviction Buy as Data Center and AI Infrastructure Demand Explodes

In the rapidly evolving landscape of artificial intelligence (AI) and data center infrastructure, Marvell Technology (MRVL) has emerged as a standout performer. With a 37% year-over-year revenue surge in Q3 2025 to $2.075 billion and a bold acquisition strategy targeting the next frontier of photonic interconnects, the company is uniquely positioned to capitalize on the AI infrastructure boom. For investors seeking exposure to this transformative sector, Marvell's strategic moves, robust earnings, and analyst-driven optimism make it a compelling high-conviction buy.

Earnings Outperformance and Data Center Momentum

Marvell's Q3 2025 results underscore its dominance in the data center market. The company reported record net revenue of $2.075 billion, driven by surging demand for its data center products. CEO Matt Murphy highlighted that "demand for products is accelerating," a sentiment echoed in the company's revised guidance. For Q4, Marvell expects revenue of $2.2 billion ±5%, with non-GAAP diluted EPS of $0.79 ± $0.05.

The data center segment, a cornerstone of Marvell's growth, delivered a 38% year-over-year revenue increase in Q3 2025. This momentum has prompted the company to raise its long-term forecasts. Previously, Marvell projected data center revenue growth of 25% in FY2027 and 40% in FY2028. However, with strong order visibility and AI infrastructure demand surging, the company now anticipates even higher growth in FY2027. Analysts note that custom silicon demand alone is expected to grow at least 20% in FY2027, with acceleration in the second half of the fiscal year.

Strategic Acquisition of Celestial AI: A Game Changer

Marvell's $3.25 billion acquisition of Celestial AI, a photonic interconnect startup, is a pivotal move to solidify its leadership in next-generation AI infrastructure. Celestial AI's technology enables optical interconnects for package, system, and rack-level connectivity, offering a power-efficient alternative to traditional copper-based solutions. This acquisition is expected to drive revenue growth, with Marvell forecasting a $500 million annualized run rate from Celestial AI's photonic fabric by Q4 2028, doubling to $1 billion by Q4 2029.

The strategic rationale is clear: as AI systems evolve into multi-rack configurations, high-bandwidth, ultra-low latency interconnects will become critical. Celestial AI's expertise in photonic fabric positions Marvell to meet this demand, with the acquisition projected to contribute to data center growth starting in the second half of 2028. Analysts at Piper Sandler and Roth Capital have cited this move as a key factor in their recent upgrades, emphasizing its role in enhancing Marvell's AI infrastructure capabilities.

Bullish Analyst Upgrades and $135 Price Target

Marvell's outperformance and strategic bets have caught the attention of Wall Street. Piper Sandler raised its price target to $135 from $85, maintaining an Overweight rating, while Roth Capital and Wells Fargo also elevated their targets to $135, citing strong guidance and the Celestial AI acquisition as catalysts. These upgrades reflect confidence in Marvell's ability to execute on its long-term vision.

The $135 price target implies a significant upside from Marvell's current valuation. With a forward P/E ratio of 25.65 and an EV/sales ratio of 11.04, Marvell trades at a discount to its peers, including Broadcom and Credo Semiconductor, which carry higher multiples. This valuation gap, combined with the company's projected revenue growth and margin expansion, creates a compelling risk-reward profile for investors.

Near- and Long-Term Catalysts

Marvell's growth trajectory is supported by both immediate and structural drivers. In the near term, the company's Q4 2025 guidance and continued momentum in custom XPU design wins provide a strong foundation. Longer-term, the integration of Celestial AI's photonic interconnects will position Marvell to capture a larger share of the AI infrastructure market, which is expected to grow exponentially as enterprises adopt multi-rack AI systems.

Additionally, Marvell's focus on high-performance computing (HPC) and its expanding partnerships with cloud providers and hyperscalers create a durable competitive advantage. As AI workloads intensify, the demand for Marvell's solutions-ranging from storage to networking-will only accelerate.

Conclusion: A High-Conviction Buy for the AI Era

Marvell Technology is a rare combination of a high-growth story and an undervalued stock. Its outperforming earnings, aggressive data center revenue guidance, and strategic acquisition of Celestial AI position it as a leader in the AI infrastructure revolution. With a $135 price target backed by top-tier analysts and valuation metrics that suggest upside potential, MRVL offers a compelling opportunity for investors ready to capitalize on the next wave of technological innovation.

As the AI infrastructure boom gains momentum, Marvell's ability to deliver both near-term results and long-term value makes it a high-conviction buy in 2025 and beyond.