Marvell Technology's Optics Business Sees Robust Growth, What's Next?

Marvell Technology's optics business is experiencing robust growth, driven by the industry's transition to 1.6 Terabit optical interconnects. Its co-packaged optics solutions feature higher interconnect densities and longer reach, making them ideal for AI systems. The company's Silicon Photonics Light Engines support speeds up to 6.4T and are expected to drive business in the second quarter of fiscal 2026. Revenues grew 63% YoY in Q1 FY26, with a consensus estimate of $8.22 billion in FY26, indicating 42.6% YoY growth.

Marvell Technology's optics business is experiencing robust growth, driven by the industry's transition to 1.6 Terabit optical interconnects. The company reported a 63% year-over-year (YoY) increase in revenues during its first-quarter fiscal 2026 earnings, with a consensus estimate of $8.22 billion in FY26, indicating a 42.6% YoY growth [1].

Marvell's latest introduction, co-packaged optics solutions, feature higher interconnect densities and longer reach, making them ideal for AI systems. These solutions replace copper connections with optical fibers, optimizing networking needs in AI systems. Additionally, Marvell's Silicon Photonics Light Engines support speeds up to 6.4T, combining several parts into compact modules suitable for both plug-in and co-packaged uses. These features can help enterprises scale their large AI workloads [1].

The company expects its optics solutions to drive business in the second quarter of fiscal 2026. This growth is a contributing factor in Marvell Technology's top-line growth, as the industry transitions to next-generation AI infrastructure, cloud data centers, and scale-up and scale-out networking [1].

Marvell Technology's growth is not without competition. Broadcom and Coherent Corp. are formidable competitors in the optics space, offering pluggable optics, optical components, and transceivers. Broadcom's offerings include PAM4 DSPs and optical transceivers, while Coherent focuses on coherent optics and optical engines used in data centers [1].

From a valuation standpoint, Marvell Technology trades at a forward price-to-sales ratio of 6.95X, lower than the industry's average of 8.66X. The Zacks Consensus Estimate for Marvell Technology's fiscal 2026 and 2027 earnings implies year-over-year growth of 77.7% and 27.73%, respectively [1].

Shares of Marvell Technology have lost 34.8% year to date against the Electronics - Semiconductors industry's growth of 14.9%. However, the company's strong growth prospects in the optics business and the broader AI infrastructure market suggest potential for recovery [1].

References:
[1] https://www.nasdaq.com/articles/marvell-technologys-optics-business-expands-whats-horizon