The $2 Billion Photonics Bet About to Pay Off

Marvell Technology (NASDAQ: MRVL) reports earnings Thursday, and the results are going to tell us a lot — but only if you know where to look.

As it stands, Wall Street expects adjusted EPS of about $0.93 — a 39% jump from a year ago — on revenue of roughly $2.71 billion, up 35%.

And options traders are pricing in a swing of about $30 a share on report.

That’s a lot of volatility riding on one earnings call.

But again, most of the financial press is going to spend Thursday night arguing about the wrong part of the business.

The Chips Everyone’s Watching Aren’t the Story

Marvell makes custom AI silicon for the likes of Amazon and Microsoft.

That segment is growing at a healthy 20% or so this year, and it’s the part of the business that gets all the headlines because it sits next to Broadcom (NASDAQ: AVGO) in every “who wins the custom chip war” story on CNBC.

But Broadcom already controls about 70% of that market across its three hyperscaler programs with Google, Meta, and OpenAI.

Marvell is playing catch-up there, with something like 20%–25% share.

That’s not where the real opportunity is.

Follow the Light, Not the Silicon

The part of Marvell’s business nobody’s talking about is optical interconnects — the DSPs, amplifiers, and drivers that move data between AI chips using fiber optics instead of copper wire.

Marvell controls somewhere between 60% and 65% of that market. And management has guided that segment to grow more than 70% year over year in fiscal 2027 — more than triple the growth rate of the custom silicon business everyone’s fixated on.

CEO Matt Murphy has called the interconnect business “the standout of the group.” That’s not marketing spin. That’s the actual math behind why this stock is up 161% year to date, compared with Broadcom’s 36%.

So why does this matter so much right now?

Because copper has hit a wall.

Modern AI data centers need to move staggering volumes of data between chips, and copper wiring simply can’t carry it more than about 10 meters without the signal degrading. Every one of those optical connections needs a chip like Marvell’s PAM4 DSP to encode and decode the signal.

Nvidia figured this out a while back. It’s already sunk $2 billion into Marvell as part of an NVLink Fusion partnership built around exactly this bottleneck.

And Thursday’s report will give us some insight on how that bet is faring.

It will also answer three questions I’m watching closely.

What to Watch in Marvell’s Earnings Report 

First, does interconnect guidance climb even higher — past the 70% mark analysts are already using as their base case?

Second, does management name a new hyperscaler partnership, which would be the clearest signal yet that the custom silicon side is closing the gap with Broadcom?

And third, does the options market’s $30 swing resolve up or down?

I’d be positively shocked if the interconnect numbers disappoint. TSMC just raised its own forecast for the global semiconductor market to $1.5 trillion by 2030 — a 50% upgrade in a single revision — and it explicitly credited AI and high-performance computing for the bulk of that growth.

None of that growth happens without moving more data, faster, using less power. That’s the entire photonics thesis in one sentence.

If Marvell’s custom silicon numbers come in soft on Thursday, don’t be surprised if the stock takes a hit anyway — Wall Street loves to punish the segment everyone understands and ignore the one that’s actually driving the re-rating.

That would be a buying opportunity, not a red flag.

The interconnect business is the one compounding at 70%-plus, and it’s the one tied directly to a problem — the copper wall — that isn’t going away no matter how the custom chip race between Marvell and Broadcom shakes out.

I’ve been tracking the small-cap names that supply the materials and IP behind this shift for Secret Stock Files, including one company building on exactly the kind of technology Marvell’s interconnect business depends on.

You can get the full details on that here.