HOLY AI Merger: Nvidia's AI Stocks Marvell & Lumentum MERGING

Well, on the same day that we get crazy Google earnings, which we already broke down in a separate segment, we just got a mega deal between Marll and Lumenum supposedly in the works that could happen as soon as next week. Well, the deal could be announced as soon as next week. Now, this is crazy because you're talking about Marll, which is a $221 billion company, which Jensen himself has suggested could be the next $1 trillion company. And another company called Lummentum, ticker light, LI T, which is appropriate given that they work on lasers for fiber optics. Get it? Light. Anyway, they are an $83 billion company. This is an insane potential acquisition for Marll which does not have the balance sheet to justify this. That's why the stock's going down and that's why light is going up. So let's understand a little bit of the background here. So the the basic gist of what's going on is the Marll CEO is going allin on co-ackage optics CPO and fiber optics laser connections. Okay, that's different from a copper connection. Who's in the copper camp? Jensen says you use copper as much as you can because it's way cheaper. Right? So, think about this as just connecting uh a few different things. either a data center to a data center, a rack to a rack at the other side of the data center, or inside of the rack, a chip to a chip, or even inside of a chip, a part of a chip to another part of a chip. Those are four layers that you could connect stuff in. Fiber optics pretty much already handle data center to data center, and they're slowly getting to rack to rack. fiber optic cabling to have faster, lower latency connectivity between these data centers, which all becomes much more important when you're working artificial intelligence and you want rapid responses for either customer service or voice AI or agents or whatever. All this stuff is going to get a whole lot more extreme and the investments in all this are just beginning. But the point is Marll takes the argument that we are going to start seeing rackto rack basically go all fiber. We are going to see chip to chip go fiber and then we're going to see inside of the chip fiber to fiber because the speeds are going to get so insane that you're going to hit what they call a copper wall. Now Jensen says use copper as long as you can. It's cheaper. Okay. better margins for Nvidia that way. Broadcom CEO, he says, "Look, we'll do lasers, but we like copper." Okay, so Broadcom CEO guy, I actually like him. I think he's a very humble guy. Broadcom, I've got some notes here. Broadcom does 60% of the ASIC market. I'll just show them to you. This is actually in our course member only kind of like research tab, but whatever. Uh, Broadcom does 60% of the ASIC market. Meta and Anthropic joined uh Broadcom and co-development as well. real competition they see is you know Nvidia but GPUs are like you know your general purpose workhorse ASIC is very specific it's in the name specific application specific integrated circuit Marll does only about 15 to 25% of the ASIC marketplace so Broadcom is the leader over here and so Marll is taking a different approach to Broadcom Broadcom says look we'll do copper as long as we can in fact we've got some new copper products that can go really asked, "We're good for a while." Marll is like, "No, man. We're going to go optics because we think optics are going to be the futurep proof of the future." Well, that's redundant, but you know what I mean. Uh, and that copper is going to get left behind. You know what the Broadcom CEO literally says? He says, uh, so he's asked about fiber optic, right? And this is literally his line. I wrote this down. This is in the course member research tab. Remember, you could be a member. You get lifetime access to this kind of stuff at reinvest one.com. This is just a sample of the stuff that we'll be talking about in the reinvest uh research terminal later this year. But anyway, he writes on optics. Oh, I try to avoid bright shiny objects. Obviously, you know, he's being facitious here because fiber optics are bright and shiny. Anyway, I like the guy. I actually think he's a smart guy. I I think the answer is you buy both, right? Like Broadcom and Marll. Not personalized advice. I have exposure to both of them. full transparency. Uh but uh uh Broadcom is used by Google to manufacture the TPUs. Marll gets some TPU revenue as well. But these are two very big differences between Broadcom and Nvidia's point of view and Marll and Lum. Now you might think that makes Nvidia bearish on fiber. No. Nvidia invested $2 billion into Marll and $2 billion into Luentum into both of them. Nvidia has a collective $4 billion investment. Now, that's really interesting. I think what uh Jensen is doing is he's hedging his bet. Hey, let's use copper today. It's good for the margins. But, you know, if fiber works out, great. We called it. We invested. And we call Marll the future $1 trillion company. That would be like a 5x from here. Okay. Well, that's cool. And they want to obviously ride that wave up. But what do they see? Well, what they see is they're going to set up Nvidia is going to set up Marll to do its best to integrate their products into Nvidia ecosystems. So that way Nvidia and the whole CUDA mode can still be strong and Marll doesn't, you know, chip away at Nvidia's lead. They're basically saying, "Look, we want everybody to buy our GPUs. This is our ecosystem. Okay, we got the uh we got the Ethernet. We got NVLink. Uh we got the Vera CPUs, we got the uh Reuben GPUs, the Blackwells, whatever. We got the whole stack, baby. We got switches. You name it. We got Spectrum X, which is a copperbased Ethernet. We have it all. You don't need anyone else, says Nvidia. And then you got Marll, which is this little squeaky animal going, "Yeah, but we're designing all these AS6. You know, all these people are doing custom chips and uh you know, they they'd love to be able to integrate them in your Nvidia system, you know, your Nvidia ecosystem." And so you might wonder like, okay, well, what kind of chips are they integrating with? And the answer uh is a lot of them. Uh Marll does the Tranium XPU, which represents about 15.5% of Marll's revenue. They do uh 8.4% 4% of their revenue comes from the um I don't know how to say it, Maya custom XPU from Microsoft and then the uh Axion CPU from Google some of their TPUs as well and then a custom chip design with Meta. So Marll is doing all these deals with Amazon, Microsoft, Google Meta. Those are companies that happen to be blowing a lot of money on AI and so Nvidia is kind of like you got to deal with all those guys. All right, all right, all right. How about this? We'll create something called Envy Link Fusion, and you can be one of the few people to use it. We'll open our arms to you, Marll. You can bring your crap into our racks. You want to ride my rack? Just plug into Envy Link Fusion, and Marll will be one of the partners. And then Marll's like, "Great. We have infiltrated the Nvidia rack. This is wonderful. We're deep, boys. We're deep. How can we go deeper? Let's buy the whole damn stack. That's basically what they're saying. Buy the whole damn stack. Because see, Marll is a fabulous ASIC manufacturer. So, they could design, but they don't actually do everything inside of the rack. So, you kind of have to think like there's rack, then you have like cables. These cables could be produced by a company like Corning, which manufactures the glass that uh goes inside of the fiber optic cabling. And then you have something that injects the light, a device that's shooting the light, right? Lumenum manufactures those. Okay. Then Marll does the chips that collect or translate that light data, switch to switch data. But then Marll also has these custom AS6. And so Marll's like, look, we could do the GPU work for you. We could do the Marll DSP. This is, you know, server to switch. We could do switch to switch, which is our photonix chip. We could then buy Lumenum, which injects the light. The only thing they haven't bought is Corning, which is, you know, in that vertical, which is essentially the glass and fiber manufacturer. Now, Corning is 113 billion company. This is like a $150 company. I actually am really excited about Corning. I don't own Corning. I'm also really excited about uh Lmentum. And I'm kind of pissed because we've been talking about Lumenum in the course member live streams and I've been talking about how much I like them and how interested I am in them. But, you know, I'm not convinced I want to buy yet. And so, I was a little pansy weeny baby and I didn't buy them yet. And, you know, now they're up 10% because of this acquisition, of course, you know, whatever. But, we've been talking about Lmentum because this whole fiber optic thing, this is just getting started. I think it's still early on this. I know some people are like, "Oh, it's late." The DSPs are the digital signal processor by the way. These are like the brain inside of the optical modules for fiber optics and Marll designs those right. Lumenum is a manufacturer. So by buying Lumen, Marll would also be buying the manufacturing capabilities that they do not have right now, which is pretty remarkable. So Jensen's quote on all this, by the way, is use copper when you can. Use optics when you must. Kind of an interesting little take there from uh Jensen. He's always got the little hot takes, right? But I personally think this is very exciting because Marll uh I was also reviewing another Marll interview. This was a a legacy one. But this Legacy interview just to kind of get some insight into where the CEO's head is. He thinks the next This video is This sponsor is brought to you by meet.com/silo. Wait a second. Points for stocks. You may have heard about our sponsor Silo today. It's basically what Built did for rent, but this time it's for investing. So, if you're not familiar with this, here it is. Silo is the first and only investing platform that gives you credit card style points, but on your brokerage account. Every month, they give you points based on your account value. you get an annual multiplier of 0.5x points on your total account value. So if you got $500,000 in an investing account, you'd earn 50 bips. That's 250,000 points every single year. Dang, I'm missing out on some points. Points are redeemable for cash. You know, a lot of us are probably thinking that like, man, wait, what? I want points. What can I do with them? 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And so with the launch of their very first transfer partner, Silo is officially exiting beta and switching to their long-term points earning rate of 0.25% in November. But anybody who signs up this month locks in those 50 basis points for at least the first year. And you might even get grandfathered in. But of course, check their program details. So, if you want to lock in.5x points on your stocks, 50 bips, and earn up to 250,000 points as a new member, make sure to use my link meet.com/silo. It's easy meet.com/silo s i l to get started by the end of this. He thinks the next phases of growth are not just moving data like moving data is what they're doing with fiber optics. It's also storing data. And this gets really deep and I'm sorry this is like this is like so niche and nerdy and I apologize but I have this belief that first of all I how should I put it? I think the next boom isn't necessarily going to go directly to memory but a place that got sold off with memory that might recover faster is storage. This sounds crazy, but Agentic AI uses so much damn KV cache over time and robotics is just going to make this worse. What's going to happen is you're going to need more storage and eventually you might use a lot of offrack storage where you have like all the NAND SSD, you know, whatever is over in that room over there and all the GPUs in the A6 are over here. Well, how are you going to connect those two things together? How about fiber optics? fast, baby. See how all these things start linking together, you know, plugging into each other. It's crazy. Uh anyway, and I'm not here to say that I can tell you exactly which company is going to perform the best out of this whole stack. I think in this environment, spoiler just between us, okay, don't tell anyone. I think you lean in on hardware, not personalized financial advice, but I think you have to be pretty damn diversified inside of it because if you go all in on one of them, it could end up pulling a Google on you, right? So, you diversify amongst these hardware plays and you just bet that the whole damn ship of AI is going up. You know, unless you're a bear, then you do the opposite. But if you're a bear, you're possibly not even watching. Okay, so let's look at the actual fundamentals a little bit. So the last fundamental that we did on Marll and the course member live stream was on October 5th. Now remember all this stuff that we go through, some of it's going to be well we're going to have a lot in our research terminal in the future. That's part of what's coming out uh in the Reinvest one. You pay once, you get lifetime access, but uh reinvest research is coming out. But you also get if you join our course member live streams and that's where we do a lot of fundamental analysis, technical analysis. We'll look at these plays and we'll try to understand, hey, where are the technicals? Where are the fundamentals? What's a what's a buy? And we're just trying to understand more. We're trying to learn more. This is a learning exercise where every day we're trying to expand our knowledge with what the hell is actually going on with artificial intelligence. And there's a lot. So, we think we do a really good job with this, but we're going to do an even better job when our research terminal comes out. And the terminal is literally going to have a module on building an Aentic AI business or improving your business with Agentic AI, being a better consumer with Agentic AI. You get the course member live streams, the nine courses, uh the research terminal, the stock terminal, the homes terminal. Like you get it all in one bundle at reinvest one.com. We think it's a killer deal and you really want to join it in 2026. This is going to be like full self-driving where all of a sudden you can't get lifetime access to it anymore after 2026 ends and then it's going to be like damn I wish I got lifetime access because I think it's in a year from now people are going to go holy crap that's actually really good. We'll see it's early. Okay so this is the Marll statement of operations. So this is our income on Marll. We have uh 36% increase in net revenue. Cost of goods sold actually grew less than that. So, their pricing power grew. So, we've got strengthening pricing power at Marll. Very bullish about Marll's pricing power. I love them. Uh, they also divested an automotive business and they had free cash flow, a free cash flow yield of only about 1.68% which is on the lower side, but you've got some free cash flow. They did also borrow uh and they issued a little bit of stock. So, you know, they're they're also in this race of, hey, we got some building to do here. Uh, you can see my note over here. I wrote Broadcom has some optical ambitions, but Copper Connectivity, they're a copper connectivity heavyweight. Marll leans into CPO CPO optics. Okay. Right. I wrote, I think of Marll as the discount stepsis to Broadcom. She's a bit more pricey, which is kind of ironic because I I actually think Marll has a higher price than Marll right now. But I guess what I mean by this is market capwise. Okay, market cap wise, you're talking a $200 billion market cap versus about a trillion dollar market cap at Broadcom, which might even be more. That might be like a trillion and a half now. I can't remember. But anyway, uh that's So when I say it's a discount, the Broadcom valuation is lower than Marll's. But Marll is that smaller upand cominging step row that's making the bat on optics and this absorption of light. Damn, it pisses me off. No, it's actually great. I'm actually really bullish Marll on it. I would buy the Marll dip on this because I want the combined company. Like these are I am very happy if this goes through. Obviously the Marll stock is going to go down. Light stocks going to go up. That's happens every time there's an acquisition because Marll doesn't have the money. Okay, they do not have $83 billion in cash sitting around. They got like $6 billion of free cash sitting around. So, this is going to be debt and shares. It's going to be dilutive. Yeah, Light's going to have some cash on their balance sheet as well, but not much, dude. They got $3.8 billion in bills and they got $3.4 in cash and receivables. So, there's no cash in their $80 billion market cap. So, you're going to have to take on debt and stock to do this at Marll. So yes, Marll stock goes down in the near term, but this is a behemoth that they are creating. This is delicious. Oh, thank you for the shout out uh per 8236. I love reinvest one. Thanks, Kevin. Oh, yeah. Appreciate that. So, take a look at this. This is what I wrote. Okay, this is what I wrote on September 25th. Oh, 925. That's my crush's birthday. Well, this was my high school crush. I don't know why I still remember her birthday. It just makes Lauren mad. Don't tell her I said that. Um, it's very transparently known. Uh, I got rejected by the girl in middle school. Okay. I asked her out for pizza and she said no. And I still haven't forgotten. Uh, anyway, this is a massive photonix play for artificial intelligence. Mega boom like uh memory has already happened. So, there's been this mega boom in and light. The stocks actually come down a lot since we did this analysis. Uh, and and I thought they were they were a little expensive then. So the last you know four weeks the stock has come down a little bit. Uh I so I said at 1.2 peg there are cheaper options like Broadcom and Marll are actually cheaper. However I said this still has upside if it gets a sustain if it could sustain this growth and should rise with the hardware 2.0 rally I see coming you know post the Iran situation. They see the net revenues growing 1.8x and gross profits are up 2.7x. So you're talking massive pricing power here. Their operating expenses are only up 14%, margins 41%. This is sexy, man. Yes, we did have a loss over here. Why did the loss happen? That was because of an extinguishment of debt. So, you kind of have to ignore this nonsense over here on the right. It's more one time. Uh, that's Sydney SW's birthday. Was her name Sarah? Nope. Her name was Kristen with a Y. Uh, anyway. So, um, okay. investing activities and let's see 100 million. Okay. Okay. Okay. Receivable 3.8 billion of bills. Yeah, we already covered that. This is the financial information assets. Yeah, we've already covered that as well. Okay. So, let's let's look let's go into this a little bit more. Okay. So, Corning has massive supply agreements. Corning is an interesting one, too. I'm uh let me do a quick valuation check on Corning. Uh Corning is GLW. They're at about a 1.39 peg. Great pricing power, but but they have a legacy business in it, right? So half of the business at Corning is eh and the other half is great for fiber optics. It's just not as pure of a play. So you're really paying a fair price for an entire company when only half of the business is booming. That said, you know, Dell did really well when only a tiny portion of their business is booming. And honestly, Dell has gotten cheap. Dell has gotten a whole lot cheaper. So, uh, this is very interesting. Now, if I go look a little bit more here, right now inside of racks, GPU toGPU links are 100% copper, but copper can't scale beyond 3 m at the speeds desired for the next generation clusters. And the more the speed goes up, the more the copper distance that you could cover like halves. I think they say for every doubling in speed you want to accomplish, you have the distance that copper can cover. And this is why Corning is seen as such a big opportunity in scaling out with fiber. But this is why Marll is going f it. Even if we have to tank it in the short term, we want the full stack. We want the laser. We want the CPOS. We've already got the DSPs. We've got the AS6. We've got the connectivity to get inside of the Nvidia rack. We almost have everything to be fully vertically integrated. This CEO was going fullon Elon on your butt. And I like the guy. I I think I think he's more ambitious than the Broadcom guy. I think the Broadcom guy is more conservative. That does increase execution risk. But I like the guy. I respect the guy. I respect this acquisition. I'm a big fan. Uh uh and and even though the one that I own, Marll, is going down on this and Light, the one I wanted to buy, the the one that got away is going up on this. I have to say overall this is brilliant. Big fan. Uh and it this just reiterates the AI boom that is coming. It is just getting started. And you get an Iran deal, man. Come on, baby. Here's Kevin with that Iran deal. But everything flip-flops and we go towards hardware 2.0 no rally and these valuations that are super cheap now, then you're going to get the euphoric rally. Then people are going to go, "Holy smokes, that's what a bubble actually looks like." That's my opinion. Maybe I'm wrong. So, in the meantime, I'll just play this. >> Oh man, your boy Kevin just lost lots of money. Oh, but that's okay. I am with you. With you. Here we go. Come on. Push it. Find the dip. The dip. >> If you like that video, check this one out. I think you're going to love it. >> Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. Kevin Praath there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.