The $115 billion all-stock combination of Marvell Technology and Lumentum, announced Monday, met immediate skepticism from investors. The Indian Express reports that Lumentum shares fell 11% while Marvell shares were down about 6% on the news.

Global Banking & Finance Review, citing Reuters reporting, puts the damage even sharper: Marvell fell more than 10% and Lumentum tumbled over 15%, with both stocks lagging the wider market.

The muted reaction is striking for a deal pitched by CEO Matt Murphy as a once-in-a-generation opportunity in AI connectivity.

The core bet is that laser-based optical links, not copper, will connect the racks of AI processors now filling data centers, a trend known as co-packaged optics.

According to Global Banking & Finance Review, the deal's equity value of $102.5 billion exceeds half of Marvell's market capitalization and is more than ten times its previous biggest purchase, the $10 billion Inphi buyout in 2021, and values Lumentum at about 33 times projected core operating profitability versus a peer median of about 16 times.

"This is an enormous bet and investors are right to ask if Marvell is paying too much and taking on too much at once," Axel Rudolph, chief technical analyst at IG Group, told the outlet.

The Indian Express reports Lumentum investors would receive 4.5 Marvell shares per share held, owning about a third of the combined company.

The Indian Express reports that analyst Saja Dogra of Rosenblatt Securities last week predicted an antitrust review that could take 12 to 18 months, including intense scrutiny by regulators in China. Marvell itself predicts the deal will close in the first half of 2028.

Global Banking & Finance Review adds that Marvell would owe Lumentum a $5.8 billion break-up fee if it walks away, Lumentum would owe $2.9 billion in similar circumstances, and Marvell would pay Lumentum $3.2 billion if regulators block the deal.

Competition is already intense: Nvidia invested $2 billion each in Lumentum, Coherent, and Marvell earlier this year, and Broadcom looms as the incumbent rival.

If completed, Global Banking & Finance Review reports the combined company would generate more than $21 billion in annual revenue with adjusted operating margins in the low 40% range, under Matt Murphy as chairman and CEO.

Per the same outlet, Marvell recently bought Celestial AI for $3.5 billion, struck a Google chip-supply deal worth up to $120 billion in sales through fiscal 2033, and forecast fiscal 2031 revenue of $70 billion to $90 billion.

The company also flagged headwinds, noting surging cash burn at tech giants such as Amazon and Alphabet has fueled a recent selloff in chip stocks.