The Light Pipes — Photonics & CPO
Inside an AI computer, data moves between chips on beams of light.
Modern AI uses so many chips at once that copper wires can't carry the data fast enough. So everything inside an AI data center is now connected with tiny lasers and fiber-optic cables . Every laser needs a special crystal called indium phosphide. There are roughly two companies outside China that make those lasers (Lumentum and Coherent). NVIDIA put $4 billion into them in March 2026. The next inflection — 'co-packaged optics' (CPO) — moves the laser right inside the chip package, and a fresh wave of names (Sivers, POET, Fabrinet, Ciena) sits in that stream.
You can build a million GPUs, but if you can't connect them with light, you have a million paperweights.
7 names on the watchlist
Vertically integrated InP + 1.6T/3.2T + CPO stack
Coherent makes the lasers, packages them into transceivers, and is one of the few suppliers building the next-generation 'co-packaged optics' (CPO) systems — where the laser sits right next to the chip. NVIDIA gave them $2 billion in March 2026 to lock in supply. They own the entire stack from indium phosphide crystal to finished transceiver.
EML laser supply — the structural shortage
The biggest non-Chinese maker of the tiny lasers (called 'EMLs') that go inside fiber-optic cables . The market is structurally 25-30% undersupplied. Their 'OCS' (optical circuit switching) backlog is over $400M. NVIDIA invested $2B in March 2026 to lock them in for 32 months.
Optical contract manufacturer — the assembly floor
Thai-based factory that assembles the finished optical transceivers for Lumentum, Coherent, and most of the industry. Doesn't matter who wins the laser war — Fabrinet builds it. Q2 FY26 revenue hit $1.13B, up 38% YoY.
WaveLogic 6 — 1.6T coherent optics for cloud
Ciena's WaveLogic 6 Extreme is one of the only 1.6T coherent optics platforms shipping . Cloud-direct revenue up 76% YoY. As hyperscalers connect AI campuses to each other across cities, this is the layer that does it.
Independent CW laser supplier — the overflow choke
Tiny Swedish company that makes the continuous-wave lasers used in silicon photonics modules . Sits as the 'overflow' supplier when AMD, Meta, Ayar Labs, POET, and Lightmatter all need lasers and the big two (Lumentum, Coherent) are sold out. OTC.
CPO engine outlier — small-cap optionality
Small Canadian company building 'optical interposer' chiplets — basically a way to bolt photonic modules directly onto custom AI chips . Pre-meaningful-revenue. If their chiplet platform gets a single major hyperscaler design win, the stock could double or triple. Lottery ticket with real engineering.
Specialty glass and optical fiber
Corning makes the actual fiber-optic cable that physically connects every AI data center — plus advanced display glass. Already in your Berserker portfolio at +101% from buy. Every meter of new AI fiber buildout means Corning fiber. Pricing power is improving as supply tightens. Manage via your existing 50-day moving-average rules.
- Dylan Bristot, AI Bottlenecks · whatllm.org · May 2026