Marvell announced industry-first 2nm optical chips designed to address the AI 'power wall' for interconnects and power delivery.

Marvell Technology opened higher Monday, trading at $248 in the first hour, up 1.5% on the session, after unveiling the industry's first 2nm optical interconnect demonstrations for AI data centers. The move extends a one-week gain of 5% and a year-to-date advance of 192%.

The catalyst is a technology milestone. Marvell disclosed the industry's first 2nm optical interconnect demos for AI data centers, including 102.4Tbps co-packaged optics. Co-packaged optics (CPO) place the optical engine on the same substrate as the switch or accelerator silicon, shortening data pathways and cutting energy per bit—a direct answer to the electricity constraints boxing in hyperscale buildouts. By demonstrating 2nm optical tech capable of handling 200G and 400G per lane, Marvell steps beyond the current 800G deployments and the ramping 1.6T generation to the coming 3.2T standard. That matters for hyperscalers designing training and inference clusters that link tens of thousands of XPUs across multiple racks, where copper runs out of reach at the speeds required.

The announcement lands on a fundamental backdrop already in motion. Marvell reported record Q2 FY2027 revenue of $2.739 billion, up 37% year over year, with Data Center revenue of $2.17 billion, up 46% year over year and now representing 79% of total revenue. Non-GAAP EPS came in at $0.94. Q3 guidance was set at $3.150 billion plus or minus 5%, with EPS of $1.10 plus or minus $0.05. The August 27 filing also raised the fiscal 2027 and fiscal 2028 outlooks.

On the earnings call, CEO Matt Murphy told investors that "the magnitude of our scale-up optics opportunity next year is much larger than we thought just a quarter ago" and that Marvell expects scale-across network bandwidth requirements to be more than 10 times greater than current front-end DCI networks. The 2nm demo validates Marvell's earlier strategic acquisitions: the Celestial AI photonic fabric acquisition that closed February 2, 2026 and the XConn Technologies chiplet connectivity deal that closed February 10, 2026.

The optical push runs parallel to Marvell's custom silicon expansion. Management disclosed an expanded partnership with Google that includes a warrant for Google to acquire up to 7% of Marvell shares tied to revenue milestones, and Murphy said custom revenue is expected to more than double in fiscal 2028. Being first to 2nm optics tightens Marvell's position versus Broadcom in high-speed networking silicon and pairs with the expanded NVLink Fusion partnership with NVIDIA for scale-up switching. Marvell trades near a market cap of $217.4 billion, a forward P/E of 58, and carries an average analyst price target of $289 against 39 buy or strong-buy ratings and five holds.

The next scheduled catalyst is Marvell's Investor Day on October 6, 2026 in New York, where management has said it will detail the long-term custom silicon trajectory, scale-up optics, and the fiscal 2029 revenue envelope.