"Potential FCC rules on optical transceivers more likely to come at 3.2T" - $Lumentum(LITE.US), $Applied Optoelectronics(AAOI.US), $Coherent Corp.(COHR.US), $SIVE.
Morgan Stanley met with Washington officials:- Restrictions would likely start at 3.2T modules made in China (800g/1.6T would be left alone)- Potential restrictions would likely keep laser market tight (combining US DSPs + lasers could meet the 65% US value threshold per MS)- Chinese modules could qualify if 65% of bill of materials is US content. Chinese modules using US DSPs and lasers are already near that level- Analysts expect the positive impact on laser pricing... to be more important than any broad redistribution of transceiver market share.- Analysts don't expect this to bottleneck hyperscaler AI buildouts, they name InP substrate supply as the key variable to watch (hello $AXT(AXTI.US) ) TLDR:Component suppliers in general are really positive. Like $Semtech(SMTC.US) probably winner here for TIAs/drivers (I don't think this was listed), maybe $Maxlinear(MXL.US) for DSPs too. $Applied Optoelectronics(AAOI.US) another large beneficiary. $SIVE is high-key alpha for laser beneficaries since they have "tremendous capacity" coming online, and that points to US foundries (they haven't formally disclosed location). Since previous slideshows show 2 US foundries 1 Taiwan foundry (Win Semi) in terms of their capacity partnerships. And it's process of elimination. From CIOE Channel checks it does look like they're starting to work with Chinese pluggable players, (so they'd avenues moving forward as US supply chain component beneficiaries). Of course $Lumentum(LITE.US) / $Coherent Corp.(COHR.US) would be happy. TLDR: Western supply chains for Lasers / DSPs / TIAs / others are already bottlenecked but qualified capacity becomes even more important.
AAOI 2X Long ETF (AAOX)
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Barclays: total sales for the ethernet market is expected to increase from ~$20 billion in 2025 to $80 billion in 2031. AI scale-out remains the largest segment, while AI scale-up expands fastest, with a 413%/198% yoy unit growth in 2027 and 2028, respectively. AI-related demand is estimated to be 79% of units in 2031, compared to 62% in 2025.
$NVIDIA(NVDA.US) $Applied Optoelectronics(AAOI.US) $Lumentum(LITE.US) $Coherent Corp.(COHR.US) $Credo Tech(CRDO.US) $Macom Tech(MTSI.US) - D
$Applied Optoelectronics(AAOI.US)
Post 5 Episode 23
Context: What has strengthened my AAOI thesis is that high-speed optics demand is now translating into actual production pressure. In Q2, revenue reached a record $191.9 million, 800G volumes more than doubled sequentially, and management said demand for 800G and 1.6T products is expected to outpace production capacity through mid-2027.
My trade: That changes how I look at AAOI. The question is increasingly less about whether hyperscalers need faster optical links and more about whether AAOI can execute its manufacturing ramp. The company is targeting roughly 650,000 units of monthly 800G/1.6T capacity by year-end, versus capacity approaching 200,000 currently. Its Q3 revenue guidance of $255–290 million also points to another sizeable step-up if execution follows through.
Takeaway: Growth stories become more compelling when the constraint moves from “Can we find customers?” to “How quickly can we build enough product?” For AAOI, the next chapter may be less about proving the AI-optics opportunity exists — and more about executing fast enough to capture it.
@Captain's Treasure
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