Breakfast News: Did Nvidia Just Favor Marvell?

1. Nvidia’s Fingerprints Are All Over Marvell’s Lumentum Deal

In June, Nvidia (NVDA +2.29%) CEO Jensen Huang interrupted Marvell’s keynote to call Marvell Technology (MRVL +0.33%) the next trillion-dollar company. Five months later, on Monday, Marvell agreed to buy Lumentum (LITE -0.62%) in an all-stock deal valued at $115 billion. All three companies are Fool recommendations, and we plan to hold the combined Marvell and Lumentum indefinitely.

Both companies play a key role in a change inside artificial intelligence (AI) data centers, where more data now moves between chips as light instead of electricity. Every light-based connection needs a laser, and Lumentum is one of the few companies that can make them at scale. Marvell already designs the chips that work alongside those lasers, so this deal gives Marvell a laser supply of its own.

We believe Nvidia “helped” bring these two companies together, because a stronger Marvell gives Nvidia a heavyweight ally against Broadcom (AVGO +3.07%).

• Nvidia bet on both companies first: In March, Nvidia invested $2 billion in Lumentum and agreed to buy billions of dollars of its lasers. Nvidia also put $2 billion into Coherent (COHR +3.77%), Lumentum’s main rival, to secure even more laser supply. Four weeks later, Nvidia invested $2 billion in Marvell, which already makes chips designed to work with Nvidia’s systems. Monday’s deal brings Nvidia’s laser supplier and its chip partner together under one roof.
• The deal includes special treatment for Nvidia: Nvidia’s $2 billion Lumentum investment came with special terms that ordinary shareholders don’t get. The merger agreement lets Nvidia keep those same terms after Lumentum becomes part of Marvell, and Nvidia is the only investor this clause covers. By our estimate, Nvidia would own about 2.5% of the combined company.
• Broadcom is the common rival: Broadcom’s AI chip sales hit $16.7 billion last quarter, and Broadcom is the only company selling custom AI chips and networking alongside its own lasers. Broadcom also backs UALink, a rival to Nvidia’s chip-connection technology. Marvell plus Lumentum gives tech giants a second complete option, and this one would come with close ties to Nvidia.

The companies’ upcoming merger filing will list every meeting that led to this deal, including any involving Nvidia. Until then, we’re holding both stocks and plan to own the combined company for years.

2. AI’s Rough Day: Ballots, Bots, Beijing

In a single 24-hour window on Wednesday, three distinct forces – corporate security, global diplomacy, and electoral politics – converged to prove that the biggest threat to AI growth isn’t model performance, but friction.

• Governance panic: Oracle (ORCL +5.85%) just scrapped a $7 billion chip-leasing deal with Chinese tech giant Tencent (TCEHY +0.32%) after regulatory pressure from the U.S., according to the Financial Times. That shows how geopolitical friction can erase big revenue pipelines.
• Security shocks: The fear of unconstrained execution triggered CrowdStrike (CRWD +1.19%), recommended by Team Hidden Gems and by Team Rule Breakers, to release its Falcon Guardian “AI Kill Switch”. It’s a fail-safe to forcibly terminate rogue autonomous agents before they breach enterprise systems. This comes right after the summer’s biggest AI scare: OpenAI’s own agents escaping a test environment and breaching Hugging Face.
• Political jitters: Concerns over runaway tech have moved from boardroom pitch decks to the ballot box. Democrats, seen as proponents of data center moratoriums, won big in the midterms, including the Texas governor’s race. Will that hit the heart of the AI build-out? Wells Fargo estimates that 27% of data center gigawatts come from Texas alone.

The AI game is changing. Revenue won’t flow to who builds the biggest model. It will flow to who builds the strongest governance, runtime security, and infrastructure to keep it running safely.

3. EMCOR Wires Up a Bargain

Team Hidden Gems

Team Hidden Gems sees EMCOR Group (EME +3.61%) reaching $1,523.33 within five years, more than double today’s price of about $669. Our first Team Hidden Gems rec in November 2024 is already up nearly 50%. EMCOR wires and cools hospitals, factories, and data centers, and it wins by bringing a Hidden Gems favorite, technical superiority, to an industry built on hard hats and blueprints.

• Built twice, installed once: EMCOR maps each construction project in detailed 3D models and prefabricates wiring and piping in its own shops before crews reach the site. Those tools, plus smarter labor scheduling, helped earnings per share grow about 35% in Q2 2026, well ahead of revenue growth of about 20%.
• Powering the data boom: Electrical and cooling systems make up 55% to 70% of a data center’s construction budget, and EMCOR installs both. That puts a big share of each new build’s spending within EMCOR’s reach, and demand from data centers and hospitals pushed its backlog of signed work to about $17 billion in Q2 2026.

At about 21 times trailing earnings, EMCOR’s tech edge comes at a fair price, and we expect it to carry the stock toward our target.

4. Today’s Question!

Do you think Nvidia had a hand in orchestrating this deal?

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