MaxLinear is another under-the-radar optical networking beneficiary, supplying a range of components within optical transceivers, with its most notable being optical DSPs for 400G, 800G and soon 1.6T solutions.
The company is seeing strong demand emerge for its Keystone DSP family, with management raising its 2026 revenue forecast for Keystone by >40% already, from $100-130 million to $150-170 million. Impressively, this growth is being driven by 400G and 800G modules as the 1.6T product, Rushmore, has yet to ramp.
The pivot upstream to ramping more heavily on 800G and 1.6T is expected to benefit both revenues and margins from higher ASPs, but it also opens the door for a prolonged revenue runway as 1.6T growth is expected to maintain strong through 2027 with attach rates increasing with larger GPU systems.
Fundamentally, margins have remained pressured and cash flows are quite thin, but there are some green shoots emerging as MaxLinear is forecasting a return to GAAP operating profitability in Q2 for the first time in three years.
Brief Product Overview
MaxLinear supplies a range of key components within optical transceivers, AECs and other connectivity solutions, such as PAM4 DSPs, transimpedance amplifiers (TIAs) and storage accelerator SoCs. While AI data centers (Infrastructure) are rapidly becoming MaxLinear’s main growth outlet, it also serves broadband, wireless, automotive and industrial end markets.
- Keystone Optical DSPs
MaxLinear’s Keystone family spans twelve PAM4 DSPs, including both 400G to 800G with integrated drivers for EML/SiPho transceivers, bare die options, and driverless DSPs. MaxLinear also has introduced variants of Keystone to target both AOCs and AECs as well.
The company says the third-gen DSPs offer ‘best-in-class’ power consumption, enabling 7W 400G optical modules and 13W 800G designs. The Keystone DSPs can also be paired with MaxLinear’s Topanga and Washington TIAs to provide complete solutions for customers.
Keystone was stated this quarter to be ramping at multiple major hyperscale customers across the US and Asia for both 400G and 800G scale-up and scale-out applications. It also underpins MaxLinear’s optical data center momentum this year into 2027, with management seeing DSPs as their outright #1 TAM.
Keystone is expected to drive the near-term growth, per the opening remarks: “We also expect a step function data center revenue increase beginning in Q2 with expected strong upside as run rates expand into 2027. At the center of this data center momentum is our Keystone PAM4 DSP optical transceiver platform. Keystone is now ramping at multiple major hyperscale customers across both the U.S. and Asia, supporting 400G and 800G — 800G PAM4 deployments for scale-up and scale-out applications.”
- Rushmore 200G PAM4 DSP
MaxLinear unveiled Rushmore last year, its 200G/lane PAM4 SerDes and DPS supporting 1.6T optics and active copper cable deployments. Rushmore is compatible with both Ethernet and InfiniBand, and will enable <25W 1.6T optical interconnects with low latency, and optimized performance across all laser technologies from EMLs to SiPho. MaxLinear says that when paired with its Washington TIA, Rushmore will “provide the best performance on the market.”
MaxLinear added in Q1 that customer engagement for Rushmore is accelerating faster than expected, with production ramps expected in late 2026 with strong revenue growth continuing into 2027.
Here is what was stated in the opening remarks: “So moving forward to 1.6T, the critical thing to keep in mind is that there is enormous confidence out there. We're shipping Keystone into major data centers today, and they're ramping very strongly in 2026. And we have now rolled out our 1.6 Terabit Rushmore product and Annapurna family for electrical applications.
And I think that this level of execution a part and the success with the cloud relationships, module partnerships and the call and interop completion is creating a far more pull for 1.6T participation than I would have guessed at this point in time. So in a sense, we hope that by the end of the year, we'll have called on 1.6T and start transitioning […]”
- Washington 200G TIA
Transimpedance amplifiers (TIAs) are current-to-voltage converters, amplifying the current generated by photodetectors within optical modules to voltage signals that can be processed by DSPs. For high-speed optics such as 1.6T transceivers, TIAs play an important role in helping maintain signal integrity at faster rates.
MaxLinear recently unveiled its four lane/200G Washington TIA at the end of April, designed for 1.6T transceivers and capable of supporting fully retimed, half-retimed, and linear interfaces, from LRO/LPO, NPO and CPO applications.
Washington interoperates with PAM4 DSPs from all major DSP vendors, simplifying integration into existing system architectures, while also complementing MaxLinear’s portfolio of DSPs and drivers to allow customers to build and customize systems for their specific power, performance and reach requirements.
As discussed below, the ability for the TIA to be a component in any architecture is key: “But honestly, I mean, the TIA is beyond the TIA for Rushmore, right? If you think of an LPO strategy that the TIA is a fundamental block. If you think about LRO strategy, the TA is a fundamental block.”
- Annapurna scale-up retimer
Annapurna is MaxLinear’s high-performance 224G PAM4 scale-up retimer, helping boost reliability of copper connectivity at 224G/lane speeds. We recently covered this challenge in our free newsletter, Inside Nvidia’s $4B Optical Strategy—and Why CPO Changes Everything, where effective length of AECs shortens from 100G to 200G speeds due to signal degradation.
Annapurna is available in both eight and sixteen lane configurations to support both 1.6T and 3.2T AEC and on-board retimer deployments, and compatible with ESUN, UALink, and Ultra Ethernet protocols. Currently, MaxLinear is playing on the Ethernet side with Annapurna but management explained they are laying the groundwork to play wherever the retimer market moves in the future, such as with NVLink Fusion.
The CEO stated the retimer opportunity is humungous: “So especially, I know there's a lot of hoopla about AECs because of success of one very successful company on AECs. But if you look at the market size, the opportunity for a silicon player, the AEC, the retimer market electrical for AI scale it inside the compute server is humongous. — as the speeds increase.”
- Panther storage accelerator SoC
MaxLinear’s Panther V storage accelerator enables ultra-low latency direct memory access between storage accelerators, NVMe SSDs, and network cards, bypassing host memory to reduce memory bandwidth consumption in AI workloads. It also offloads compute-intensive compression, deduplication or other tasks from the host CPU to accelerate performance. With on-chip SRAM, Panther V enables high-speed data movement across the storage tier, with its 450Gb/s throughput offering 2X the performance of its Panther III SoC.
MaxLinear is actively sampling Panther V with key customers, with management forecasting storage accelerator revenue to at least double in 2026 over 2025 based on current engagement and design win activity across Tier 1 network and cloud providers: “And this is just the beginning of our Panther product — Panther road map product family. So we expect this year the revenues to double. We have said that before. And hopefully, next year as well, we got very strong growth based on the visibility we have.”
The following context on Panther was also shared during the Q&A regarding its nuances at the product level, in addition to serving the massive memory market: “So the big benefit of Panther is it's an accelerator, so it reduces latency dramatically and the power efficiency that brings to it. So it enables much more capability than just memory compression, right? So I really feel that the performance part related to low latency, high-bandwidth access enablement that Panther provides is the key differentiator.
Thus far, our use of Panther has been really at the enterprise appliance level, if you will. But now these enterprise storage appliance are getting increasingly deployed into mainstream cloud centers. So I really feel there's much more to come with Panther V and Panther VI in the future.”
Optical DSP Demand Accelerating, Keystone Revenue Target Raised 40%
It should be no surprise that optics demand is accelerating, as evidenced by recent earnings reports from Lumentum, Coherent and Applied Optoelectronics, and this accelerating demand is driving rapid growth for MaxLinear.
While we are just one quarter into 2026, the strength of customer orders and visibility into optical program ramps at customers has already led MaxLinear to increase its optical data center growth forecast by 40%. MaxLinear now projects optical data center revenue between $150 million to $170 million for 2026, raised from its prior forecast from Q4 for $100 million to $130 million. Though management did not provide a 2025 number, analysts implied 2025 optical revenue of $60-70 million, so this could represent up to ~180% YoY growth.
When questioned about intra-quarter dynamics driving this steep >40% raise (and rightfully so), management explained that they were being conservative with the initial guide and optimistic for stronger growth in the second half.
“Now with all the visibility and the lead times that are necessary for providing the product, we have very good visibility and the ramps are setting in very nicely, both across 400-gig and 800-gig solutions. So I just think it's all about timing of the ramps and the success of the calls and our ability to scale up to meet the demand that the surging demand we are seeing now.
The important readthrough here is that MaxLinear’s main optics growth story this year is still being driven by 400G and 800G, and is not yet benefitting from higher ASPs with 1.6T. This suggests that its optics growth runway is likely to extend and expand as both 800G and 1.6T ramp through 2027 and take a larger share of units and revenue, coinciding with Rushmore’s ramp – more on this next.
Despite being a small fish in a big sea, MaxLinear has a few advantages on its side – it has design wins across all optics module vendors globally, with CEO Kishore Seendripu explaining that the “success of Keystone makes us an incumbent, right? And the power of incumbency is the ability to have the relationships with the cloud customers, the module makers, the confidence in your ability to supply and the quality of your product.”
Additionally, MaxLinear has optical DSP growth coming from both hyperscaler-owned designs (direct qualification) as well as merchant solutions from module vendors, with CFO Steven Litchfield saying that growth is coming both from “hyperscaler-owned designs [and] through module vendors providing a merchant solution.” However, MaxLinear has not been upfront about which hyperscalers it is directly engaged/qualifying with and shipping to, rather emphasizing that they believe they are “only halfway there to our end data center diversification across all the hyperscalers.” This implies that hyperscale engagements may be more limited, or that there is still room to land additional hyperscalers in the future.
This positions MaxLinear quite well for growth even as the industry continues to face tight supply constraints, as exposure across the vendor landscape should mean that it is rather insulated if individual suppliers face headwinds to growth from these constraints. Despite having this broad customer exposure, MaxLinear does expect to remain fairly concentrated on a few end customers through its ramp this year, expanding into 2027.
Touching on 1.6T Dynamics and (Stiff) Competition
There are a couple puts and takes for MaxLinear’s participation in 1.6T optical modules. On the positives, management hinted that demand is already shaping up much stronger than expected, aligning with commentary from transceiver vendors, with 1.6T boding well for growth via higher ASPs and margins.
First on demand, CEO Kishore Seendripu explained that MaxLinear’s cloud and module vendor relationships, along with Rushmore’s interoperability with any DSP is “creating far more [of a] pull for 1.6T participation than I would have guessed at this point in time.” This is expected to “have an uplifting effect on our revenues and gross margins even as our market share expands” as mix shifts to 1.6T due to the higher ASPs, along with potential for more unit growth. MaxLinear hammered this point home by emphasizing further that 1.6T “will actually expand our ability to garner more revenues and more market share.”
However, 1.6T is not appearing in growth (yet) and MaxLinear was straightforward in noting that they are not the first with 1.6T against their two incumbent competitors, which may present a challenge in catching up during the ramp. These two competitors are most likely to be Marvell and Broadcom. Broadcom will likely pose a more substantial competitive threat as its Taurus DSP platform is scaling to 400G/lane for 1.6T support (and upcoming 3.2T modules), double MaxLinear’s Rushmore and Marvell’s Ara platforms at 200G/lane. While competition against these two incumbents will be challenging, considering MaxLinear’s size, even a tiny gain in market share could translate to substantial revenue growth.
1.6T revenue may begin appearing later this year, but the largest contributions will likely be tied to Rushmore’s ramp geared for 2027. Though MaxLinear has not provided much insight into the degree of ASP uplift from Keystone to Rushmore, a rough assumption for a ~30% uplift and a similarly-sized but accelerated ramp versus Keystone could see Rushmore quickly ramp to >$200 million in revenue by 2028. For comparison, Keystone launched in early 2023, and is scaling to >$150 million in roughly three years.
Broader industry dynamics suggest that this shift upstream from 400G to 1.6T could be quite lucrative, looking beyond the simple ASP growth story. This is because MaxLinear will soon be playing in a much larger market of growth, and also because optics attach rates are expected to increase rapidly as Nvidia’s Vera Rubin platform comes online.
Estimates from Goldman Sachs earlier this month suggest that 400G is likely accounting for just 5-9% of the market, while 800G is around the 20% level in Q1 and Q2, meaning MaxLinear’s 2026 optics growth story is being driven by the smaller third of the market. Shifting to 800G later this year and 1.6T into 2027 would see MaxLinear move to participating in a higher-value, larger market with both speeds expected to account for as much as 60% of the market by late next year.
Source: Goldman Sachs
Outside of shifting from a (declining) 400G market into mainstream 800G and 1.6T markets, growing attach rates for optical modules with Rubin further support strong growth. With Blackwell and Blackwell Ultra, GS estimates optics attach rates of roughly 1:2 to 1:3 depending on a two or three-layer networking topology, but sees this doubling to 1:4 to 1:6 with the VR200 rack. This combination of doubling attach rate translating to higher unit volumes and higher optics content per rack alongside ASP growth with 1.6T offers a strong tailwind for growth into 2027.
MaxLinear Plays in Scale-Up, Scale-Out and CPO
It’s important to touch briefly upon scale-up and scale-out demand, as optical transceiver demand is more heavily weighted towards scale-out applications due to copper’s physical limitations over longer distances at 200G and faster speeds.
MaxLinear is seeing Keystone ramp for scale-up and scale-out with strong growth across both, and engagement across the two for Annapurna and Rushmore. These two products, targeting electrical retimers and AECs, is likely to be where MaxLinear’s scale-up growth appears as the majority of the optical transceiver TAM (70%) is weighted towards scale-out. This scale-out focus is key over the medium-term as optical transceiver content could nearly triple from ~$173,000 in Blackwell Ultra to nearly $500,000 in the Rubin Ultra NVL144.
Moving to CPO — as the industry shifts towards CPO, first revenues among the optics stack are expected to be realized in scale-out applications, though as we noted in our Lumentum analysis for Premium subscribers, scale-up opportunities could be larger. On this note, MaxLinear is preparing for a range of optical outcomes, with its Washington TIAs underpinning a ‘full platform’ approach for CPO or other packaged-optics solutions, such as LPO or NPO:
“So the CPO market, if [customer are] going to be bare bones, then the TIA and driver is a natural fit. If they go more sophisticated on the DSP-based one, we already have the platform offering. But the real question comes, as you go towards XPO, CPOs and the various manifestations of it. So the full offering is super important. So Washington is the first step in the direction of a fundamental platform that will have multiple derivatives and incarnations.”
The catch here is that MaxLinear does not expect CPO “to be a huge part of our revenues” over the next couple of years, stating they think they are “3 years out from determining” how the CPO market plays out. Regardless, it will be something to pay close attention to as CPO ramps are on deck for the primary module vendors later this year with further growth expected in 2027.
Infrastructure Growth up 35% QoQ
Putting this all together, MaxLinear is seeing robust growth arise in its Infrastructure segment, with Q1 revenue of $62.8 million up 136% YoY and notching one of the strongest QoQ growth rates in the AI industry this quarter at 35% (though arguably at quite a small scale).
Additionally, data center growth is expected to see a “step function” increase in Q2 with strong upside expected into 2027, and based on commentary, this is likely tied primarily to Keystone. Currently, this is being modeled above at ~31% QoQ, or an increase to 50% revenue share from 46% in Q1. This would also maintain a similar YoY growth rate as Q1 at 138% YoY.
Considering that Keystone has multiple customers progressing with ramps, more programs expected to layer in later this year and potential initial contributions from Rushmore as well, there is potential for MaxLinear to sustain strong sequential growth through year-end.
Management hinted that they “absolutely” expect more upside to that $150-170 million optical forecast as programs reach full run rates — assuming that growth does not moderate following Q2’s step-function increase but instead remains robust at ~$20 million QoQ through Q4, this could project Q4 Infrastructure revenue to be roughly $122.5 million, up 163% YoY. This would represent approximately a $500 million annualized run rate, double its current rate at $250 million.
Financials
Revenue Growth Accelerating
MaxLinear’s revenue has since recovered from the stiffer headwinds it had faced in 2024, where it had seen (35%) or larger quarterly declines across all four of its segments. Q1 revenue was $137.2 million, up 43% YoY and roughly flat QoQ, marking a slight deceleration from 48% growth in Q4. The flat QoQ growth highlights the strength of Infrastructure and Keystone, as Broadband revenue saw a sharp (24%) QoQ decline.
For Q2, MaxLinear guided for revenues between $160 to $170 million, representing a reacceleration to 51.7% YoY at midpoint, with QoQ growth similarly accelerating to 20.3%. This is expected to be primarily driven by Infrastructure revenue where MaxLinear projected a “step-function” increase stemming from strong optical interconnect demand, alongside growth from all four segments.
Looking at the second half of 2026, consensus estimates currently point to growth moderating to the 30% range, exiting the year at 33% growth, a sharp ~18 point deceleration from Q2’s guide. This comes from consensus pointing to sequential dollar growth of just ~$8 million in both Q3 and Q4, a substantial step down from Q2’s guided $28 million at midpoint.
However, there are multiple signals that suggest MaxLinear could exceed these estimates and maintain strong sequential growth in the back half of the year. Given the demand signals we have been seeing across the optical transceiver landscape, there should be few reasons that MaxLinear cannot maintain rather robust Infrastructure growth as outlined above, aside from a lack of execution with the 400G and 800G ramp with 1.6T on deck.
Also layering into growth will be large-scale deployments later this year for single-chip fiber PON and WiFi 7 platforms at a second Tier 1 service provider in North America with additional ramps in Europe. As such, maintaining ~$20-$30 million sequential dollar growth through 2H (which could come from Infrastructure alone) could see MaxLinear exit the year with quarterly revenues above $200 million.
For the full year, consensus points to growth of 40.5% to $657 million, but the scenario discussed above for ~$25 million QoQ in 2H at the midpoint would place FY26 revenue at $707 million.
Consensus estimates also point to revenue growth decelerating rather sharply to 20.7% to $791.3 million in 2027, yet expectations for “strong upside as run rates expand into 2027” within the data center and 1.6T ramping both suggest revenue could land significantly higher. This does not include MaxLinear’s first XGS-PON win with a hyperscale data center which management explained could be “quite a bit of needle mover even in the next year itself in the second half on a run rate basis.”
Key Segments
MaxLinear reports in four key segments: Infrastructure, now its largest segment as of Q1, Broadband, its historically largest segment, Connectivity, and Industrial/Multi-Market.
As noted above, Infrastructure revenue was $62.8 million in Q1, accounting for 46% of revenue. This marked a 136% YoY and 35% QoQ increase, a sharp acceleration from 76% YoY and 15% QoQ in Q4. Assuming a step up to 50% revenue share in Q2 as the main growth driver next quarter, Infrastructure revenue would be roughly estimated at $82.5 million, up 138% YoY and 31% QoQ.
Broadband revenue was $43.6 million, accounting for 32% of revenue. While revenue did increase 6% YoY for the segment, sequential growth was poor at (24%) QoQ. Management said there was a seasonality component to this QoQ decline, but the segment is expected to start growing in Q2 and into 2027, supported by fiber PON ramps.
Connectivity revenue was $18.6 million, accounting for 14% of revenue. Growth was rather soft, down (8%) YoY but up 3% QoQ. Management sees wireless infrastructure momentum improving due to increased investments in 5G ran, transport overhaul and backhaul to support cloud and edge AI connectivity.
Industrial and Multi-Market revenue was $12.2 million, accounting for 9% of revenue, and up 47% YoY but down (13%) QoQ.
Margins Negative but Signs of Improvement in Q2
MaxLinear’s GAAP margins have been quite heavily pressured down the line, yet Q2 is showing a notable shift as management guided for GAAP operating margin to jump towards positive territory. This is likely driven by the step function data center growth and margin tailwinds carried by higher speed optical components.
GAAP gross margin was 57.5% in Q1, up from 56.1% a year ago and roughly flat QoQ, while adjusted gross margin was 59.5%, up less than a point YoY and again roughly flat QoQ.
For Q2, MaxLinear guided for GAAP gross margin of 56-59%, up 1 point YoY and flat QoQ, and adjusted gross margin of 58-61%. Management noted that there are some headwinds to gross margin related to rising wafer costs and packaging, but they “will certainly continue to see nice benefits on the gross margin side as infrastructure gets to be a larger percentage of our business.”
GAAP operating margin was (12.5%) in Q1, ticking slightly lower from (10.9%) in Q4 but marking a solid improvement from (48.1%) a year ago. Adjusted operating margin was 15.9%, slightly lower from Q4’s 16.2% but up from (1.7%) a year ago.
GAAP operating margin is where green shoots are arising in Q2, with management guiding for a thin but positive 0.5% margin at midpoint. This would represent a strong 13 point sequential increase and MaxLinear’s first positive GAAP operating margin in over three years. Adjusted operating margin was guided to be 21%, a five point sequential increase and up nearly 14 points YoY. This large delta between GAAP and adjusted operating margins is primarily due to high SBC and some acquisition and integration-related costs.
GAAP net margin was (32.9%) in Q1, as MaxLinear recorded a rather large $26.5 million income tax provision in the quarter; this compared to (51.8%) a year ago and just (10.9%) in Q4. Adjusted net margin was 14.2%, up from (4.6%) a year ago and 12.7% in Q4.
GAAP Profitability Expected in 2H
Given the guide for operating margin to shift back to positive territory in Q2, earnings are expected to soon follow.
Driven by the income tax provision, GAAP EPS was a wide ($0.52), missing estimates for ($0.21) and only minimally improving from ($0.58) a year ago. Adjusted EPS was $0.22, beating the $0.18 estimate and increasing from ($0.05) a year ago.
For Q2, GAAP EPS is expected to inflect towards profitability, with consensus pointing to just ($0.05). MaxLinear is expected to see positive GAAP EPS in both Q3 and Q4, though remaining very thin. Adjusted EPS is expected to be $0.33 in Q2, up 1,547% on a small comp of $0.02.
For the full year, GAAP EPS is expected to be ($0.53), driven by Q1’s loss, while adjusted EPS is expected to be $1.34, up 331% YoY.
Cash Flows and Balance Sheet
Operating cash flow dipped to negative territory after three quarters positive, though MaxLinear had a strong reason for this – substantial prepayments for wafers to support increasing demand for data center products with increasing 2H backlogs.
Q1 operating cash flow was ($8.9 million) for a (6.5%) margin, up from (11.9%) a year ago but down from 7.6% in Q4.
Q1 free cash flow was ($11.1 million) for an (8.1%) margin, up from (14%) a year ago but down from 4.9% in Q4.
Cash and equivalents totaled $62.5 million, while debt was $123.8 million.
Inventories were $85.8 million, roughly flat YoY but up from $78.1 million in Q4.
Conclusion
MaxLinear is forecasting strong optical data center revenue growth from 400G and 800G products via Keystone, with its 1.6T focused Rushmore ramping later this year into 2027. Management has already raised its 2026 optical data center revenue forecast by >40% from $115 million to $160 million at the midpoints, with a step function increase expected next quarter. Ramping 1.6T later in 2026 and into 2027 presents further opportunities for growth to remain strong considering the ASP uplift and potential for increased content and attach rates within upcoming rack-scale systems.
Fundamentally, while MaxLinear stands out for its 35% sequential growth in data center-driven revenue this quarter, it arguably is much weaker down the income statement than other optical beneficiaries such as Lumentum. Margins have been quite weak and Q1 did show a larger GAAP loss. Q2 is expected to right the ship and put the company potentially on a path to GAAP profitability in 2H for the first time in over three years.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Recommended Reading: