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Lumentum Holdings Inc. (NASDAQ:LITE) shares surged — at one point 17% — in after-hours trading following a report Marvell Technology Inc. (NASDAQ:MRVL) is in advanced talks to acquire the optical components maker. Marvell shares moved lower.

• MRVL stock is tumbling. See the chart and price action here.

A deal could be announced as soon as next week, according to people familiar with the matter. No final agreement has been reached, and terms or timing could still change. Representatives for both companies were not immediately available for comment.

Lumentum carries a market value of roughly $83 billion. Marvell is valued near $221 billion, according to Benzinga Pro data.

Why Lumentum Matters to Marvell

Lumentum makes lasers and other optical components used to shuttle massive amounts of data at high speeds. Data centers and telecom carriers rely on the hardware to move information between servers and facilities, making it a core building block of the AI buildout.

Marvell already buys lasers from Lumentum. Bringing the supplier in-house could simplify its supply chain. Both companies are based in Northern California.

NVIDIA Corp. (NASDAQ:NVDA) also has deep ties to Lumentum. In March, Nvidia agreed to invest $2 billion each in Lumentum and Coherent Corp. (NYSE:COHR) to strengthen its data center chips with technology suited to faster AI processing.

The partnerships included multibillion-dollar purchase commitments from Nvidia, along with future capacity and access rights to advanced laser and optical networking products. Lumentum CEO Michael Hurlston said at the time the company would invest in a new fabrication facility to expand capacity.

Marvell’s Optical Push

Acquisitions have played a central role in Marvell’s AI strategy. The company agreed last year to buy semiconductor startup Celestial AI in a $3.25 billion deal to gain access to its photonics work, which uses light instead of electrical signals to create connections.

Marvell has also tightened its relationships with hyperscalers. In August, the stock rallied nearly 10% after a securities filing showed Alphabet Inc. (NASDAQ:GOOGL) could buy up to $12.2 billion in Marvell shares under the companies’ custom-chip partnership.

The arrangement set a purchase price of $206.58 per share, with the stake tied to purchasing targets through fiscal 2033.

The talks highlight a broader surge in AI-related dealmaking. Investors keep betting on the technology’s long-term growth potential, and suppliers of chips, networking gear and optics sit at the center of the spending wave.

MRVL Stock Price Activity: Marvell Technology shares were down 8.37% at $230.59 and Lumentum stock was up 8.54% at $991.99 during after-hours trading Wednesday, according to Benzinga Pro market data.

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