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A technician works at an Amazon Web Services AI data center in New Carlisle, Indiana, on October 2, 2025 (Noah Berger/Getty Images)

Optics stocks rise as executives signal more AI-related demand

Optics companies have rallied this year on expectations of higher demand for the components they make.

J. Edward Moreno

Optics companies Applied Optoelectronics, Lumentum, and Coherent rose Wednesday on signs that their products are in high demand as artificial intelligence infrastructure expands.

All three stocks were up in recent premarket trading. Applied and Lumentum were up 9.1% and 7%, respectively, while Coherent was up 2.8%. These firms offer solutions that use light rather than electricity to move information around in data center environments.

Speaking at the Optical Fiber Communications Conference in Los Angeles on Tuesday, Wupen Yuen, head of cloud and networking at Lumentum, said:

“Some customers are asking for a billion lasers a year. Starting with a B. It used to be in the millions, now it’s in the billions, so the amount of scale is just unimaginable... Because it used to be optics is a way for communicating. Now optics is part of compute. The AI does not scale, period, full stop, without optics.”

Coherent CEO Jim Anderson said silicon photonics is poised to replace copper in AI data centers because it is more efficient:

“The reason that we’re now starting to see photonics migrate into the scale-up network is the same reason that photonics took over scale-out and scale-across. And the reason is that you take any length of distance in the data center, whether it’s 3 meters or 3 kilometers, and if you crank up the data rate and if you crank up the total amount of bandwidth, eventually you hit a point where photonics is the most power-efficient, fastest way to transmit that data across that length of distance. And so now what we’re starting to see is to continue to drive data center architecture, now adoption of photonics and scale-up.”

Applied Optoelectronics also said it’s going to increase its capacity by about 30% this year and double its anticipated capacity for 2027.

Optics companies have rallied this year on expectations of higher demand for their components. Earlier this month, Nvidia said that it would invest $2 billion apiece in Coherent and Lumentum to develop their advanced optics technologies.

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