Marvell Technology (NASDAQ: MRVL) confirmed it would acquire semiconductor startup Celestial AI in a deal valued at $3.25 billion, aiming to expand compute capacity as demand for AI infrastructure accelerates. The stock climbed more than 5% intra-day on Wednesday following the announcement.

The acquisition gives Marvell access to Celestial AI's photonics technology, which uses light rather than electrical signals to connect AI and memory chips. Marvell has been competing with Broadcom and Nvidia in developing AI-optimized chips, and CEO Matt Murphy said hyperscale customers could adopt photonics as early as 2027.

Marvell said it expected the acquisition to begin generating meaningful revenue contributions in the second half of fiscal 2028.

The company also reported adjusted EPS of $0.76 for the third quarter on revenue of $2.08 billion, slightly ahead of analyst expectations of $0.74 and $2.07 billion, respectively.

For the fourth quarter, Marvell projected adjusted EPS of $0.79 at the midpoint on revenue of $2.20 billion, topping estimates of $0.77 and $2.17 billion.