Marvell Technology (MRVL) delivered a modest fiscal Q3 upside driven primarily by strength in its data center AI business, according to Oppenheimer.

Custom application-specific integrated circuits are re-accelerating in fiscal Q4, supporting structural growth in the data center segment, which the brokerage said is expected to increase by more than 25% in calendar 2026 and roughly 40% in 2027.

Overall company revenue is projected to grow about 30% in 2027, reflecting broad gains across data center AI, optics, and networking.

In a Tuesday note, Oppenheimer highlighted Marvell's planned acquisition of Celestial AI, an optical fabric startup, as a strategic move to strengthen its co-packaged optics portfolio and expand the merchant switch addressable market to about $18 billion.

The investment firm expects Celestial AI to contribute around $500 million in annualized revenue by Q4 calendar 2027 and about $1 billion by the end of 2028, with minimal regulatory hurdles and a deal closure expected in early 2026.

The note also highlighted Marvell's leadership in PAM4 DSP optics and co-packaged optics, as well as the company's visibility on accelerating custom ASICs and optics into 2027.

Oppenheimer maintained an outperform rating, raising the price target to $150 from $115, noting that Marvell trades at a discount relative to AI peers.

Shares of Marvell Technology were up 7% in recent Wednesday trading.

Price: 99.43, Change: +6.54, Percent Change: +7.04