This AI Network Bottleneck Just Turned Into A Shopping List

Author

Noah Zelvis
February 15, 2026

The AI boom is not only about faster GPUs.

It is about moving data fast enough so those GPUs do not sit idle.

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What Just Happened

Marvell Technology (NASDAQ: MRVL) has been in a weird spot. It is clearly tied to AI infrastructure, but the stock has lagged over the last year as investors worried about competition and whether the company could keep its footing with hyperscale customers.

Then Marvell started making very targeted moves.

In early January, Reuters reported Marvell agreed to buy XConn Technologies for about $540 million, using a mix of cash and stock, specifically to strengthen its AI infrastructure networking portfolio. The deal is expected to close in early 2026, and management expects it to add to sales and profits starting in the second half of fiscal 2027, with roughly $100 million in revenue contribution by fiscal 2028. 

This came on the heels of a separate major push into next-generation connectivity tied to Celestial AI, which Reuters had previously reported as a potential multi-billion-dollar deal centered on photonics and faster data movement between compute and memory. 

Barron’s framed it simply: Marvell is gearing up for the next generation of AI by buying the interconnect pieces that help many chips act like one system, which is increasingly the real choke point in scaled AI clusters.

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The Business People Underestimate

Marvell is not a consumer brand. It sits inside the data center.

At a high level, Marvell designs chips that help move data around inside and between servers. That includes networking, switching, and connectivity. When AI spending surges, the spotlight usually lands on accelerators. But as clusters scale, interconnectivity becomes the constraint that determines how efficiently the entire system runs.

That is why Marvell’s positioning matters. If you believe AI infrastructure keeps expanding, then the companies that solve bandwidth, latency, and connectivity problems are not side characters. They are the enabling layer.

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Why The Stock Looks Weak Even With AI Everywhere

This is the part that creates opportunity and risk at the same time.

Marvell has been linked to AI for a while, but the market does not consistently reward second-order AI exposure. Investors tend to rotate between the obvious winners and whatever the newest narrative is.

There is also the reality that networking and interconnectivity is competitive. When buyers are hyperscalers, pricing power is not guaranteed. Execution has to be precise, product cycles have to land, and customer concentration always hangs in the background.

So even if the long-term demand curve looks strong, the stock can still drift when investors worry about near-term share shifts or margin pressure.

That is exactly why the recent acquisitions matter. They read like an answer to the core question: do you have the right pieces for the next phase of AI buildout?

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The Strategic Bet Behind Celestial AI And XConn

Marvell’s M&A here looks less like empire building and more like gap filling.

Celestial AI
Reuters described Celestial AI as focused on photonics, using light instead of electrical signals to improve data transfer between AI compute chips and memory. That is not a nice-to-have. That is the direction the industry is pushing as AI workloads strain traditional electrical interconnect limits. 

XConn
Reuters and Barron’s both tied XConn directly to AI infrastructure and interconnect technology, with the intent to strengthen Marvell’s networking portfolio for AI data centers. 

Here is the key idea. If AI clusters keep scaling, the winners are not only the teams that build the compute. The winners are also the teams that make the cluster behave like a single, high-throughput machine.

Marvell is trying to own more of that connectivity stack.

What Needs To Go Right From Here

For MRVL to turn from “AI-adjacent” into “AI core holding” in the market’s eyes, a few things likely matter most:

  1. Integration without distraction
    These are technical acquisitions. They need to speed up roadmaps, not slow them down.

  2. Clear product traction in AI networking
    Not hype. Proof points in design wins, customer adoption, and revenue contribution over time.

  3. Competitive positioning stays intact
    Reuters noted Marvell shares had fallen over the prior year amid strong competition from Broadcom and Nvidia. That competitive pressure does not disappear just because AI demand grows. 

  4. The market starts paying for picks that are not GPUs
    This is a sentiment piece. If investors broaden out from accelerators into the plumbing layer, MRVL tends to benefit.

The Risks You Should Take Seriously

This is not a clean, one-variable story.

  • Competition risk: AI networking is crowded and strategic. Large peers will defend share.

  • Execution risk: Interconnect is hard. Small timing misses can matter.

  • Deal risk: Acquisitions can look perfect on paper and still underdeliver if integration drags.

  • Expectation risk: When AI sentiment is hot, anything tied to AI can get priced for perfection, then punished for normal results.

None of these invalidate the thesis, but they explain why the stock can stay volatile even if the long-term trend is favorable.

How I’d Frame A Position

I would treat Marvell as a second-layer AI infrastructure play with real upside if the market keeps widening the AI basket beyond accelerators.

The cleanest way to think about it is this:

  • If AI clusters keep growing, connectivity becomes more valuable.

  • Marvell is actively buying and building to be relevant in that next wave.

  • The payoff window is not next week. It is measured across product cycles and deployments.

A reasonable approach is to size it like an infrastructure compounder, not a momentum rocket. If the stock gets a big AI-driven spike, it may make sense to demand more proof before adding aggressively. If it pulls back while the strategy remains intact, that is often where longer-term entries start to look more attractive.

The Bigger Picture

AI infrastructure is entering the phase where the bottlenecks are shifting. Compute still matters, but the winners increasingly need to solve the data movement problem.

Marvell is behaving like a management team that understands that shift. The Celestial AI push plus the XConn acquisition is a direct bet that interconnect is not just supporting cast, it is the next battleground. 

If that is right, the stock has a path to re-rating as investors stop treating networking as boring and start treating it as essential.

Bottom Line

Marvell Technology is positioning itself for the next stage of AI, where moving data efficiently becomes as important as generating it.

The recent acquisition of XConn, along with the connectivity push tied to Celestial AI, signals a deliberate strategy to own more of the AI networking and interconnect layer. 

The risk is execution and competition. The upside is that the market eventually prices interconnect like the scarce resource it is becoming in scaled AI data centers.

Action Recap

✅ What this is: AI infrastructure exposure through networking and interconnect, not accelerators
✅ What to watch: Integration progress, design wins, and evidence the acquisitions translate into revenue over time
⚠️ Main risks: Competitive pressure, product timing, and deal integration
🧭 Mindset: Multi-cycle buildout story, not a quick trade

That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.

Best Regards,
—Noah Zelvis
Tech Stock Insider