Marvell Technology is in advanced talks to buy Lumentum Holdings, Bloomberg News reported Wednesday, citing people familiar with the matter, and the market reaction showed just how large this Marvell Lumentum acquisition could be. Lumentum shares rose about 11% in extended trading after the report, Reuters said, valuing the optics maker at roughly $91 billion at that moment. Marvell shares fell more than 8% in the same stretch.
By Thursday early afternoon, the split had widened rather than closed. Lumentum rose about 4% more, while Marvell fell more than 12%, according to Reuters Breakingviews. No deal has been signed, Bloomberg’s report said the talks were still private, and a formal announcement could come as early as next week. Neither company immediately responded to Reuters’ requests for comment.
Investors aren’t cheering yet.
What Marvell would actually be buying
Lumentum makes optical components used in communications networks and data centers. Its lasers and related parts move data as light between servers, racks, and buildings. That job matters more every year, because AI work spreads across thousands of chips at once. If data can’t move fast enough between those chips, expensive hardware waits around.
Marvell sits on the other side of that trade. It makes custom AI chips and networking products, and Reuters notes it has emerged as one of the biggest beneficiaries of the AI spending boom, with its shares nearly tripling this year as demand for those products surged. Earlier in October, Marvell raised its fiscal 2028 revenue forecast to $20 billion from $15 billion, citing strong demand for its custom AI chips and networking products used in data centers.
Buying Lumentum would fit a pattern, not start one. Bernstein analysts told Reuters that a Lumentum deal would extend Marvell’s push into optical technologies, a strategy reinforced by its $3.25 billion deal for photonics firm Celestial AI announced late last year. Put together, Marvell would own more of the chain: computing chips, networking, and optics.
Why the Marvell Lumentum acquisition is hard to price
Start with the cash on hand. Marvell had cash and cash equivalents of about $3.92 billion as of its latest quarter, Reuters reported. Lumentum’s market value was put at roughly $83 billion on Thursday. Those two numbers explain most of the market’s unease. Bernstein analysts said an acquisition of that size would likely be impossible to fund entirely with cash, which leaves stock, debt, or some mix of both. None of those terms have been reported, and that gap is doing a lot of work in the share price.
Integration is the second problem. Chip design and optics manufacturing are different businesses, with different customers, suppliers, and cycles. Lumentum doesn’t only serve AI data centers. It also serves communications networks, so Marvell would be buying telecom exposure as well as AI exposure. That’s complexity, and investors tend to charge for it when the price tag runs into the tens of billions.
Timing adds a third wrinkle. Advanced talks are not a signed deal. Bloomberg’s report said an announcement could come as early as next week, but the talks were private and unfinished. Deals at this scale can stall over price, structure, or board approval. Until Marvell says something itself, this is a report about talks, not a confirmed transaction.
What the market is really worried about
For Lumentum holders, the logic is simple. A buyer in advanced talks usually means a premium, and the stock jumped on that expectation. For Marvell holders, the logic runs the other way. A huge purchase can dilute existing shareholders if it’s paid for in stock, or load the balance sheet with debt if it’s paid for with borrowed money. Either route changes Marvell’s risk profile, and the market repriced it fast: down more than 8% after the first report, then down more than 12% again in Thursday’s early afternoon trading.
Don’t read that as a verdict on AI demand. Nothing in the reports suggests data center customers suddenly want fewer chips or slower networks. What changed was the financing question. Marvell’s story this year has been growth: a tripling share price, a raised $20 billion fiscal 2028 forecast, and surging demand for custom silicon. A Lumentum deal would test whether that story can absorb a purchase many times larger than Marvell’s cash pile.
Why this matters
If the deal closes, Marvell becomes a broader AI infrastructure supplier in one move. It could pitch hyperscale customers on chips, networking, and optics together, instead of selling into a stack where someone else owns the light-based links. Owning more links is a real selling point, and it puts Marvell in a stronger spot against larger rivals fighting for the same data center budgets.
If the deal collapses, the signal matters almost as much: even AI boom winners face hard limits on how fast they can buy growth, and shareholders will punish a price they see as too rich. Watch three things next: whether Marvell confirms anything at all, what it says about financing if it does, and whether the talks survive into next week intact.
Frequently asked questions
Is Marvell buying Lumentum?
Not yet. Bloomberg News reported on Oct. 28 that Marvell is in advanced talks to buy Lumentum, but no agreement has been announced and talks could still fall apart.
Why does Marvell want Lumentum?
Lumentum makes optical components that move data inside data centers. Owning them would extend Marvell from custom AI chips and networking products into optics, building on its $3.25 billion Celestial AI deal.
Why did Marvell stock fall while Lumentum rose?
Investors focused on the cost and risk of a deal this large. Bernstein analysts noted an acquisition of this size likely could not be funded entirely with cash, and Marvell held about $3.92 billion in cash at its latest quarter-end.
How big is Lumentum?
Reuters put Lumentum’s market value at roughly $83 billion on Oct. 29, after its shares jumped about 11% in extended trading on Oct. 28 following the report.
Sources: Reuters, Bloomberg