Is Broadcom Stock a Buy After Marvell's $115 Billion Deal?
Key PointsMarvell agreed to buy Lumentum in an all-stock deal that puts Lumentum's enterprise value at $115 billion.
On November 2, Marvell Technology announced it would acquire Lumentum Holdings in a stock deal valued at $115 billion. The combination aims to create a leader in artificial intelligence (AI) connectivity, encompassing chips and optical components for data transfer between AI processors. Broadcom, a rival in this field, noted the acquisition as a long-term threat rather than a short-term one.
Currently, Broadcom's shares are trading below their June 2 record close, while Marvell's shares declined more significantly. Both companies operate in overlapping markets, but Broadcom's AI business is growing rapidly, with AI semiconductor revenue increasing by 221% year-over-year. Broadcom's AI revenue forecast for fiscal 2027 is $21.7 billion, more than doubling the projected $58 billion for fiscal 2026.
The deal is expected to close in the first half of 2028, but the acquisition may not significantly impact Broadcom's fiscal 2027 outlook. Despite the deal, Broadcom remains an attractive investment at a lower price compared to the S&P 500. The reporter suggests considering buying Broadcom shares at the current price.
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