Key Points
- Marvell tumbles after announcing a $115 billion acquisition
- Palantir Revenue grows by 96%, yet stock price continues to decline
- Investors are increasingly questioning the high valuations in the artificial intelligence sector.
On November 2nd, the stock price of Marvell plummeted by nearly 13%; before trading on Tuesday, the stock price of Palantir ( PLTR ) fell by about 8%. Despite several significant advancements in the artificial intelligence industry, the selling pressure in the tech sector continues.
Marvell closed down 12.7% on Monday, following the company's announcement of a merger with Lumentum for a transaction value of $115 billion. Meanwhile, despite reporting a 96% increase in third-quarter revenue, Palantir still faces selling pressure.
This round of decline continues the selling trend of AI stock since October, highlighting that investors' concerns about high-priced mergers and acquisitions, slowing business momentum, and high valuations of tech stocks are intensifying.
Marvell announced a $115 billion acquisition of Lumentum; subsequent to this, the stock price plummeted by 13%.
Marvell confirmed on November 2nd that it will acquire the optical networking specialist company Lumentum through a all-stock transaction, with a transaction valuation of approximately $115 billion (including debt).
According to the official announcement, for each share of existing stock held by a Lumentum shareholder, they will receive 4.5 shares of Marvell stock. After the transaction is completed, they will hold approximately 33% of the shares in the merged company.
This agreement clearly exceeds the valuation of $83 billion discussed in the earlier acquisition negotiations.
Marvell It is expected that the merged business will generate over $21 billion in revenue annually and achieve cost synergies of over $1 billion each year.
However, investors have reacted negatively to the scale of this transaction and the potential dilution it may cause.
Marvell's stock price fell by 12.7%, and Lumentum's stock price fell by 18.6%, reflecting the market's uncertainty regarding the financial benefits of this acquisition and the execution risks.
This transaction is expected to be completed in the first half of 2028, but it still requires approval from shareholders and regulators.
Palantir reported a 96% increase in revenue, while PLTR continued to decline.
Palantir announced third-quarter revenue of $2.313 billion, a year-on-year increase of 96%, exceeding Wall Street's forecast of $2.18 billion.
According to its financial report, the adjusted earnings per share are $0.44, with U.S. business revenue increasing significantly by 148% to reach $984 million.
Despite strong performance, the stock price of PLTR still fell by about 8% before trading on Tuesday.
This reaction in the market stems from concerns about a slowdown in contract growth: the total contract value has only increased by 6% year-on-year, compared to a 49% increase in the previous quarter.
Palantir has raised its annual revenue forecast to approximately $8.53 billion, but investors are still concerned whether future growth will be sufficient to support its high premium valuation.
AI Stock Sales Expose Rising Valuation Risks
Marvell and Palantir are both under pressure simultaneously, indicating that companies related to AI are facing different challenges.
Marvell faces uncertainties in acquisition costs and integration, while Palantir must prove that its outstanding revenue growth can be sustained.
These concerns emerged after Intel's historic plunge and as the market's scrutiny of Amazon's AI spending continues to intensify.
The decline in NASDAQ valuations indicates that investors are placing increasing emphasis on execution capability, cash generation ability, and more realistic growth expectations.
