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By Britney Nguyen

An agreement between the companies could come next week, Bloomberg reports

Lumentum and Marvell both engage in optical technologies.

Shares of Lumentum Holdings climbed in Wednesday's extended trading as the optical-networking company emerged as a potential takeover target.

Marvell Technology (MRVL) is reportedly close to buying Lumentum (LITE), according to Bloomberg News, which cited unnamed people familiar with matter. The companies haven't reached a final agreement, but an announcement could come next week, Bloomberg reported.

Lumentum's stock rose 8.6% in after-hours trading Wednesday, while Marvell's stock fell 8.4%.

While Marvell is best known for making custom chips, it also has an optical business and that part of the company has been getting more attention this year.

Optical networking has gained traction in the artificial-intelligence boom as customers seek out technology that can help move massive amounts of data quickly within and across data centers. Optical networking uses light to move data. Investors have debated the advantages of optical technology over traditional copper.

Marvell is a customer of Lumentum's lasers.

Earlier this year, Nvidia (NVDA) announced multiyear, nonexclusive agreements with Lumentum and fellow optical maker Coherent (COHR) for billions of dollars' worth of advanced laser systems and other optical-networking components. The AI chip maker also invested $2 billion into each company.

Neither Lumentum nor Marvell immediately responded to requests for comment from MarketWatch.

-Britney Nguyen

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10-28-26 2020ET