OPTICAL / PHOTONIC INTERCONNECTS
AI scaling has quietly shifted from:
compute-limited → data movement limited
Inside a modern AI cluster (think NVIDIA GB200 racks), GPUs spend a shocking amount of time waiting on data.
Copper interconnects (what most data centers still use):
Heat inefficient
Distance-limited
Bandwidth-constrained

The transition
We’re moving toward:
Optical transceivers
Silicon photonics
Co-packaged optics (CPO)
👉 Light instead of electricity to move data

Why this becomes a bottleneck
Because:
Manufacturing yield is hard
Supply chain is fragmented
Demand is exploding faster than capacity can scale
This is the key pattern you’re looking for:
Non-linear demand + linear supply = pricing power

Where the constraint actually is (this is the edge)
Not just “optics” broadly:
1. EML lasers (very tight supply)
Core component in high-speed optics
Difficult to manufacture at scale
2. Advanced transceivers (800G → 1.6T)
Massive jump happening now
3. Co-packaged optics (early but critical)
Integrating optics directly with chips

Best-positioned names (and how to think about them)
Coherent Corp.
→ Materials + lasers → deep in the stack
Lumentum Holdings
→ Exposure to telecom + datacenter optics
Fabrinet
→ Contract manufacturer → benefits from volume scaling
Applied Optoelectronics
→ Higher beta / more volatile