"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.
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- E
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
Trade Showcase: Trade, Show & Earn Rewards! - H
📊 𝐈𝐍𝐕𝐄𝐒𝐓𝐎𝐑 𝐍𝐎𝐓𝐄: Wafer Inspection Equipment Market Growth — Why AI Chip Production Is Driving Demand - $Applied Optoelectronics(AAOI.US) $Applied Materials(AMAT.US) $KLA(KLAC.US) $Lam Research(LRCX.US)
- C
FOMC Read: From Trust Crisis to Recession Fears
The September FOMC is done. The Fed hiked. Markets still didn’t get what they wanted.At 2 a.m. SGT Sept. 17, the Fed raised the federal funds target range by 25 bps to 3.75%–4.00% in a 12-0 vote. Firs...
PCE Cooled. Does Friday's NFP Kill A Hike? - E
Goldman Sachs: companies we visited see pricing competition remaining healthy, with 800G optical module pricing decline within single digits in 2027, and 1.6T optical module price to sustain at $700+.
$Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Applied Optoelectronics(AAOI.US) $Macom Tech(MTSI.US) - N
$Corning(GLW.US)
Context: Corning and Verizon signed a multi-billion dollar agreement for over 80 million miles of optical fiber through 2032. The deal supports Verizon's broadband expansion and AI infrastructure needs while boosting Corning's U.S. manufacturing. The deployment is intended to support growing consumer broadband and converged-service demand while expanding broadband access for homes and businesses and building the national long-haul network needed for AI hyperscalers. The agreement will also support the expansion of Corning’s U.S. manufacturing footprint, helping Verizon secure the materials needed for its convergence strategy and long-haul AI corridors.
My Trade: Corning has been in the trade for many years and has established itself as one of the core companies. The dips so far have been buying opportunities, in my opinion.
Takeaway: Corning may not have the biggest runway in terms of share price as compared to some other companies in the similar industry like AAOI. Yet, I do think it's establishment and solid fundamentals/history would make it a great pick for "safer" bets. @Captain's Treasure
Trade Showcase: Trade, Show & Earn Rewards! - P
Incredible growth expected for $Lumentum(LITE.US), $Coherent Corp.(COHR.US), and $Applied Optoelectronics(AAOI.US) with new GS optical transceiver forecasts.
- Global optical transceiver TAM revised up by 33% / 81% / 115% in 2026-28E.- In 2026/27/28E: optical transceiver market to reach $68B/131B/148B.- Driven by (1) higher rack-level AI server and ASIC AI server shipments and (2) higher estimates on the usage of optical transceivers per Nvidia GPU in rack-level AI servers. - 800G and above segment to increase at a +69% CAGR to reach $45B/108B/130B. - 800G/1.6T shipment volumes at 45M/33M units in 2026E, growing to 49M/71M in 2027E, with 3.2T shipment ramping up to 23M/68M in 2027/28E. - Silicon photonics will account for 60%/80%/80% of 800G/1.6T/3.2T optical transceivers.Just insane growth on top of what most people had forecasted a few months ago. - E
Goldman Sachs: Global Optical Transceiver Shipments
> Shipment & Forecast Revisions: Goldman Sachs raised global optical transceiver shipments for 2026–28E by 21%/31%/31%. For 1.6T and above, shipments were raised by 29%/61%/50% for 2026–28E, driven by higher rack-level/ASIC server shipments, increased optical module usage per GPU, and specification upgrades.> Market Size Projections: The global optical transceiver market is expected to reach US$68bn in 2026E, US$131bn in 2027E, and US$148bn in 2028E. The 800G and above segment is projected to grow at a +69% CAGR to reach US$45bn, US$108bn, and US$130bn respectively.> Volume and Speed Milestones: 800G/1.6T shipment volumes are projected at 45m/33m units in 2026E, growing to 49m/71m units in 2027E.3.2T shipments are expected to ramp up to 23m units in 2027E and 68m units in 2028E.> Technology Adoption: Silicon photonics is expected to account for 60% of 800G, 80% of 1.6T, and 80% of 3.2T optical transceivers.$Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Applied Optoelectronics(AAOI.US) $Macom Tech(MTSI.US) $NVIDIA(NVDA.US)
