MXL's AI Optical Growth Accelerates: Can It Challenge AVGO & MRVL?

MaxLinear MXL is benefiting from the accelerating artificial intelligence (AI) data-center optical transition, which is strengthening its Infrastructure business and expanding its presence across hyperscale networks. Infrastructure revenues reached roughly $85 million in the second quarter of 2026, surging 145% year over year and representing about half of total revenues. The momentum in high-speed optical connectivity is improving MXL’s ability to compete with Broadcom AVGO and Marvell Technology MRVL in the rapidly expanding AI data-center market.

A key growth driver is Keystone, MXL’s 5-nanometer, 100G-per-lane PAM4 DSP and SerDes platform. Keystone is ramping into high-volume production at major hyperscale customers across the United States and Asia for 400G and 800G deployments. The platform delivers almost 40% lower power consumption than competing solutions, an important advantage as AI data centers seek greater bandwidth without proportionate increases in power usage. Management noted that recent optical growth is increasingly being driven by 800G, which is expected to remain an important contributor into 2027.

MXL’s expanding Keystone customer adoption provides a foundation for further growth, creating opportunities to transition customers toward 1.6T Rushmore. Strong orders and better visibility prompted MXL to raise its 2026 optical data-center revenue expectation to $210-$230 million.  Management clarified that the more than $50-million increase in its 2026 optical revenue outlook was entirely attributable to Keystone, without assuming revenues from Washington or Annapurna.

MXL is preparing for the next generation of connectivity through Rushmore, its 1.6T PAM4 DSP operating at 200G per lane. Management believes Rushmore offers substantial performance and power advantages, along with differentiated supply-chain diversification and potential ASP upside as customers migrate to higher speeds. Rushmore, Washington TIAs and Annapurna Ethernet retimers are already sampling and undergoing customer qualification. Initial ramps at one or two opportunities are expected in the second half of 2027, followed by additional growth through 2028 and 2029. Washington can operate as a stand-alone TIA with other DSPs, expanding MXL’s opportunity in linear-drive pluggable optics and linear receive optics architectures.

The improving product mix should support profitability. MXL guided third-quarter 2026 non-GAAP gross margin to 58.5-61.5%, suggesting that the AI optical ramp could support revenue growth and profitability.

MXL Faces Tough Competition

Broadcom remains a formidable challenger because of its broad AI networking portfolio. AVGO offers 200G/400G SerDes, Ethernet switches, PCIe products, DSPs, lasers and other connectivity solutions, while maintaining a strong position in co-packaged optics and 1.6T DSPs. AI semiconductor revenues reached $10.8 billion in second-quarter fiscal 2026, up 143% year over year, with networking contributing nearly 40%, giving Broadcom significant scale in AI connectivity. 

Marvell expects interconnect revenues to grow more than 70% in fiscal 2027 as 800G demand strengthens and its 1.6T products ramp. MRVL’s TIA and driver business is expected to exceed a $1 billion annualized revenue run rate in the next few quarters, while Marvell already supplies DCI solutions to all five major U.S. hyperscalers. Its expanding coherent-light, silicon-photonics, NPO and CPO portfolio could therefore make capturing an additional 1.6T share increasingly challenging for MXL.

MXL’s Share Price Performance, Valuation & Estimates

Shares of MaxLinear have appreciated 270.5% year to date, outperforming the broader Zacks Computer and Technology sector’s 28.3% growth.

MXL Stock’s Price Performance

Image Source: Zacks Investment Research

MXL stock is trading at a premium, with forward 12-month price/sales of 6.88X compared with the broader sector’s 6.32X. MaxLinear has a Value Score of F.

MXL’s Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for MaxLinear’s earnings is currently pegged at 56 cents per share, up by 20 cents over the past 30 days, suggesting 300% year-over-year growth.

MaxLinear, Inc Price and Consensus

MaxLinear, Inc price-consensus-chart | MaxLinear, Inc Quote

MaxLinear currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research