Photonics Stocks Jump 113% in 2026 as AI Data-Center Buildout Nears $700 Billion
Updated
Updated · CNBC · Aug 18
Photonics Stocks Jump 113% in 2026 as AI Data-Center Buildout Nears $700 Billion
2 articles · Updated · CNBC · Aug 18
Summary
Bank of America said photonics and optics stocks are 2026’s best-performing global investment theme, up 113% versus a 14% gain for the MSCI All Country World Index.
Nearly $700 billion of hyperscaler AI data-center spending is driving the surge because optical links move more data over longer distances with less heat and power draw than copper cables.
The rally has spread across the group: the Tema Photonics & Optical ETF has climbed 34% this month, while Lumentum is up 163%, Coherent 90% and Applied Optoelectronics 344% year to date.
Valuations have also stretched, with Coherent at about 35 times forward earnings and Lumentum at 42 versus the S&P 500’s 20, prompting some analysts to warn that entry timing will matter.
Nvidia’s March pledge to invest $2 billion each in Coherent and Lumentum, along with demand for co-packaged optics and photonic chips, points to a broader AI supply-chain tailwind.
Are sky-high valuations in optics stocks a massive AI bubble, or the dawn of a permanent shift in global computing architecture?
As hyperscalers abandon copper, will severe supply chain bottlenecks crash high-flying photonics stocks before the projected $154 billion market materializes?
With interconnects becoming the ultimate AI bottleneck, could unresolved thermal management hurdles suddenly derail the hyped co-packaged optics revolution?