Why Marvell Stock Jumped Today
Key Points
Nvidia is making a significant investment in Marvell.
The two companies are teaming up to build advanced data infrastructure.
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Shares of Marvell Technology (NASDAQ: MRVL) surged on Tuesday after the data solutions provider formed a strategic partnership with Nvidia (NASDAQ: NVDA).
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Accelerating AI connectivity
The two tech leaders will work together to advance the artificial intelligence (AI) boom. Marvell will supply custom processors and networking technology that integrates seamlessly with Nvidia's AI computing platform.
Marvell's chips can be customized by cloud-computing network operators and other high-performance computing providers to speed up AI workloads.
"The world is racing to build AI factories," Nvidia CEO Jensen Huang said. "Together with Marvell, we are enabling customers to leverage Nvidia's AI infrastructure ecosystem and scale to build specialized AI compute."
Marvell and Nvidia will also co-develop silicon photonics technology, which uses light to transmit data faster and more efficiently.
Marvell acquired Celestial AI -- a pioneer in high-bandwidth, power-efficient photonics connectivity solutions -- for $3.25 billion in cash and stock in December.
"Our expanded partnership with Nvidia reflects the growing importance of high-speed connectivity, optical interconnect, and accelerated infrastructure in scaling AI," Marvell CEO Matt Murphy said.
Nvidia's cash should spur Marvell's expansion
As part of the deal, Nvidia will invest $2 billion in Marvell. Murphy intends to use the funds to meet the booming demand for Marvell's AI-focused products.
"This just helps turbocharge our growth and our opportunity," Murphy said during an interview with CNBC.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.
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