Is Broadcom Stock a Buy After Marvell’s $115 Billion Deal?
On Nov. 2, Marvell Technology (NASDAQ:MRVL) agreed to buy Lumentum Holdings (NASDAQ:LITE), a maker of lasers and optical transceivers, in an all-stock deal. The firms put Lumentum’s enterprise value (its stock market value plus debt, minus cash) at $115 billion, using both stocks’ Oct. 28 closing prices.
Marvell says the combination creates a category leader in artificial intelligence (AI) connectivity — the chips and optical parts that send data between AI processors.
Missed AI’s “Act 1”? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
Broadcom (NASDAQ:AVGO) knows the business well. The chip designer sells custom AI accelerators, Ethernet switches, and optical components for AI data centers. But its stock dipped only about 1% on Nov. 2, while Marvell shares slid about 13%.
At roughly $335 as I write, Broadcom stock trades about 30% under its June 2 record close of $481.57. When I last wrote about the company on Oct. 28, with shares near $342, I said I’d consider buying a little at a time.
Does a bigger rival change that?
Image source: The Motley Fool.
Marvell is building a bigger rival
Marvell already designs custom AI chips, plus network switches and the electrical and optical interconnect chips that link AI systems together. Lumentum brings high-performance lasers and optical transceivers, along with its own compound semiconductor manufacturing.
Broadcom competes in most of those markets. It designs custom AI accelerators for six customers, including Alphabet’s Google and Anthropic. The chips are made for one customer’s AI work, as an alternative to general-purpose graphics processing units (GPUs).
Broadcom also sells Tomahawk Ethernet switches. On its fiscal third-quarter earnings call on Sept. 2, CEO Hock Tan said the company had just finished designing Tomahawk 7, which he called the industry’s first 200-terabit-per-second Ethernet switch.
And Broadcom makes lasers, too.
“[D]emand for lasers … is far surpassing supply out there in the industry,” Tan said on the call. He added that Broadcom holds “a fairly substantial share of this market.”
Put simply, Lumentum’s lasers sell into a market where buyers can’t currently get enough of them. Sure, shortages like this don’t tend to last. But I think it makes the deal more of a long-term threat to Broadcom than a short-term one. A bigger rival could matter more when supply catches up to demand and buyers start shopping harder on price.
Broadcom’s AI sales are still accelerating
Showing how far ahead Broadcom’s AI business is, its AI semiconductor revenue hit $16.7 billion in fiscal Q3 (the quarter ended Aug. 2), up 221% year over year. Marvell’s total revenue for its own quarter ended Aug. 1 was $2.74 billion, or around one-sixth as much.
And Broadcom’s AI growth has picked up every quarter this year. AI revenue growth climbed from 106% in fiscal Q1 to 143% in fiscal Q2, then to 221% in fiscal Q3. Management guided for 236% year-over-year growth, to $21.7 billion, in fiscal Q4, which ended Nov. 1.
Broadcom has its own $115 billion number, and it means something else: the company’s forecast for AI semiconductor revenue in fiscal 2027, the fiscal year that started this week.
This would double the almost $58 billion Broadcom expected for fiscal 2026. And Tan said on the Sept. 2 call that the company’s already locked in the supply to get there.
“Our demand actually exceeds this outlook, and we will work to improve supply,” he said.
The deal won’t affect that year directly. Marvell expects the acquisition to close in the first half of calendar 2028, pending shareholder and regulatory approvals. So Broadcom’s fiscal 2027 will probably be over before the combined company even exists.
Time to buy?
Investors can buy this growth for less than they’d pay for the S&P 500 (SNPINDEX:^GSPC). Broadcom trades at around 17 times analysts’ consensus earnings estimate for fiscal 2027.
This compares to about 18.7 times forward earnings for the S&P 500 overall.
True, Broadcom relies on a few very big AI customers, and a stronger Marvell could offer these customers another place to shop for custom chips and lasers. But this option is probably years away. And Broadcom’s AI business is already several times the size of Marvell’s whole company.
Ultimately, the deal doesn’t change my take on Broadcom. It does make the company’s laser and switching sales worth watching more closely once the combined company exists.
Meanwhile, the stock is a bit cheaper than when I last wrote about it, and nothing in the deal affects Broadcom’s fiscal 2027 outlook. I’d still consider buying shares at this price.
Should you buy stock in Broadcom right now?
Before you buy stock in Broadcom, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $342,020!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,270,017!*
Now, it’s worth noting Stock Advisor’s total average return is 885% — a market-crushing outperformance compared to 208% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, Lumentum, and Marvell Technology. The Motley Fool has a disclosure policy.
The Nasdaq Composite plunged 5.5% on Thursday, closing in correction territory, defined as a decline of 10% or more from a recent closing high. Fears of a crackdown on data centers sent tech stocks spiraling after Texas elected a new governor, Gina Hinojosa, who had promised a temporary moratorium on data centers until new rules
Anthropic (ANTH.PVT) is preparing for what could be a historic initial public offering (IPO) later this month, with Wall Street expecting the company to launch with a valuation of between $1.5 trillion and $2 trillion. A public debut at the top end would put Anthropic ahead of SpaceX (SPCX) for the most valuable stock market
Turkish prosecutors on Thursday sought the arrest of Fatma Betül Sayan Kaya as part of an ongoing investigation into alleged irregularities involving capital market transactions, referring her to an Istanbul court after questioning her as a suspect. Kaya appeared at the Istanbul Courthouse to testify in an investigation led by the Istanbul Chief Public Prosecutor’s
AbCellera Biologics has produced a sharp year to date gain, which naturally raises a tougher question for anyone looking at the shares today. Is the current market value still grounded in the company’s book value, or has the price moved well ahead of what its balance sheet might support? The stock is up about 223.9%
Palantir Technologies‘ (PLTR -9.73%) strong business results have supported significant valuation gains for the stock. The third quarter saw the company’s revenue increase 96% year over year to $2.31 billion, and its net income surged 137% from the prior-year period to roughly $1.13 billion. Despite the strong overall results, the company’s stock has pulled back
BEP Research founder Ben Pouladian analyzes the technology stock selloff and concerns surrounding artificial intelligence infrastructure on ‘Making Money.’ President Donald Trump blamed Democrats’ sweeping midterm election victories for Thursday’s massive stock market sell-off, as Wall Street suffered its sharpest losses since April 2025. In a post on Truth Social, Trump warned that the market
On Thursday, the S&P/ASX 200 Index (ASX: XJO) had one of its best days in a long time. The benchmark index jumped 2.6% to 9,065.1 points. Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch: Image source: Getty Images ASX 200 expected
Intel (INTC) stock’s 26-year comeback and subsequent reckoning this year carry an eerie echo of its dot-com days. On Thursday, the chipmaker’s stock reached a 58% peak-to-trough decline over 30 trading days from its Sept. 24 close of $127.39. This latest drawdown was sharper than Intel’s dot-com bust in 2000, when the stock fell 53%
BEP Research founder Ben Pouladian analyzes the technology stock sell-off and concerns surrounding artificial intelligence infrastructure on ‘Making Money.’ A sharp stock market sell-off Thursday sent major indexes tumbling, raising concerns for Americans watching their retirement savings as financial experts warned against making emotional investment decisions. The Dow Jones Industrial Average plunged 1,833 points, or
Investing in Nvidia (NVDA -9.26%) has already produced many millionaires. The leading AI chipmaker’s shares have surged by more than 10,000% over the past decade. For investors who held on to their shares throughout that remarkable and sometimes volatile run, a position worth $10,000 at the start would have grown into one worth well overÂ
UnitedHealth Group experienced notable downward pressure during the trading session, primarily driven by mounting investor concern over persistent medical utilization trends and their impact on near-term underwriting margins. The managed care sector has been contending with elevated medical loss ratios, particularly within senior and Medicare Advantage populations where outpatient surgical volumes and specialized care claims
Almost everything on Wall Street is in the red Thursday, but oil is one of the few exceptions. WTI crude (CL=F) is up about 2% after its worst three-day drop since late 2021, and energy stocks aren’t joining the bounce. WTI futures fell 15% from their Oct. 30 settle above $104 to a Nov. 4
Sandisk (NASDAQ: SNDK) has been one of the most important stories of the artificial intelligence (AI) revolution. The memory maker has seen skyrocketing demand for its NAND flash memory products, which are critical for AI development, and high growth has led to outstanding stock gains; Sandisk stock is up 444% over the past year as
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, US, Nov. 4, 2026. Jeenah Moon | Reuters Whether it’s a referendum on the midterms or just a continuation of a bear market in semiconductors that dates back to the group’s peak in June, one thing’s clear from the
Bill Ackman isn’t impressed by how the stock market has been acting recently. On Tuesday, Nov. 3, the founder of Pershing Square Capital Management told CNBC’s “Squawk Box” that markets seem broken to him sometimes, with stocks trading at prices he can’t understand. But he also saw an upside for one type of investor. Long-term
Any prediction about a stock’s future price should be taken with a grain of salt. This one is no exception. Still, while past performance is no guarantee of future results, history is a reasonable indication of what the future likely holds, particularly when the underpinnings of that performance remain in place. With that as the
Palantir Technologies (PLTR -8.78%) turned in another quarter of impressive results, as revenue growth once again accelerated. However, the stock dipped on the news and is down more than 15% over the past year. Let’s dig into Palantir’s Q3 results and prospects to see why I think it could become one of the biggest winning
Quick Read Marvell’s fixed 4.5-share ratio has no collar, so the stock’s slide turned Lumentum’s 24% premium into a 21% discount. Marvell fell 19% since the announcement while the semiconductor ETF dropped 11%, and Coherent matched Marvell’s 19% decline. Analyst targets averaging $322 sit near the 52-week high, so they likely predate the deal and
Part of our midterms guide. Start here: what the vote really changes for your money. Image from Pixabay What Does Everyone Already Know? On Monday, the Nasdaq 100 closed more than 10% below its Oct. 6 peak: a correction, its third this year. On Wednesday, after Democrats won Congress, the Dow rose 3.03% to 53,356,
Tech firms tumbled on Thursday as investors contemplated the outlook for the AI boom after Democrats swept the US midterms, partly on the back of growing anger over the rapid building of data centres across the country. ADVERTISEMENT ADVERTISEMENT However, broader markets mostly rallied and oil plunged after President Donald Trump’s Republicans were dealt a
