Marvell to buy Lumentum in $115 billion deal in AI data-center bet

Marvell Technology is acquiring optical components maker Lumentum in a $115 billion all-stock deal, entering a race to capitalize on the AI spending surge. This transaction, one of the largest in 2026, hinges on the AI build-out expected to drive industry demand for years. Marvell CEO Matt Murphy stated, "We intend to help shape the next era of AI connectivity and create exceptional stockholder value."

Lumentum's shares dropped 6.5% post-announcement, while Marvell declined by 2.3%. Both stock prices have fallen since deal talks surfaced last month due to AI bubble concerns. By purchasing Lumentum, Marvell aims to tap into the AI boom and ensure a strong demand for optical components used in high-speed data transfer. Lumentum specializes in photonic products like high-performance lasers and optical components utilized in AI, cloud computing, and communications networks.

Marvell's market value has risen to over $170 billion over the past three years, primarily due to its involvement in helping tech giants like Amazon develop custom AI chips and networking technology for data centers. The deal brings Marvell's custom chips and networking expertise together with Lumentum's optical components, potentially providing a stronger position as data centers demand faster, more energy-efficient connections.

However, investors are questioning whether the deal is too expensive and if Marvell is venturing into too many areas simultaneously. Marvell's acquisition of Lumentum is its largest purchase since its $10 billion acquisition of Inphi in 2021.