From Copper to Light: The Critical Bottleneck Reshaping AI Infrastructure

Photonics is becoming one of the most important AI bottlenecks. Compute is scaling fast, but moving data between GPUs is now the harder problem. Copper hits power and bandwidth limits. Optics is the next layer.

Here’s the photonics stack — from platform architects to materials suppliers — and the public stocks exposed to it.

Platform architects

$NVDA Nvidia Nvidia sets the pace for optical adoption across AI infrastructure. Its Quantum InfiniBand roadmap is pushing 200G-per-lane co-packaged optics into 2026, forcing suppliers to scale with Blackwell clusters. Nvidia also committed $4B into the optical supply chain to secure lasers and transceivers. Role: platform architect. It determines when photonics moves from optional upgrade to required infrastructure.

$AVGO Broadcom Broadcom controls the Ethernet side of the AI networking stack through Tomahawk, Jericho, and custom ASICs. Its real importance in photonics is co-packaged optics, where lasers move onto the switch package to cut power and improve efficiency. AI semiconductor revenue hit $8.4B in one quarter, showing the scale of the pull. Role: architect of Ethernet-based optical transition inside hyperscale fabrics.

$CSCO Cisco Cisco sits at the optical transport layer linking AI clusters across data centers. Roughly 40% of its recent AI infrastructure mix came from optics, and its Acacia unit posted triple-digit bookings growth tied to 800G coherent pluggables. A new 1.6T OSFP optic and 800G LPO platform expand its footprint. Role: long-haul and cluster interconnect enabler, where coherent optics become mission-critical.

Direct Optical Components & Transceivers

$COHR Coherent Coherent is one of the clearest direct plays on AI transceiver demand. Datacenter and Communications revenue reached $1.2B, while book-to-bill moved above 4.0x as customers reserved hardware more than a year out. Management is doubling 6-inch indium phosphide wafer output by year-end. Larger wafers can produce 4x more optical chips at less than half legacy cost. Role: high-volume builder of 800G and 1.6T optics.

$LITE Lumentum Lumentum attacks the light-generation bottleneck. Its electro-absorption modulated lasers sit inside optical modules made by multiple vendors, giving it leverage across the ecosystem rather than exposure to just one box maker. The company posted record shipments of both 100G and 200G EMLs and logged an eighth straight quarter of growth in narrow-linewidth lasers. Role: core laser supplier feeding next-gen AI optical hardware.

$AAOI Applied Optoelectronics AAOI is a more direct, manufacturing-heavy photonics name. It secured a new $71M order for 800G single-mode transceivers from a major hyperscaler and is expanding capacity for both 800G and 1.6T modules. Vertical integration matters here because customers want immediate scale, not just design wins. Role: transceiver assembler and laser supplier capturing near-term AI networking demand as clusters scale out.

Connectivity ICs & DSPs

$CRDO Credo Credo bridges copper and optics through DSPs and Active Electrical Cables. Revenue reached a record $407M in one quarter, while non-GAAP gross margin climbed to 68.6%, showing strong economics in AI connectivity. Its 100G and 200G-per-lane solutions let hyperscalers use lower-power AEC links for short-reach inter-rack connections. Role: signal-processing layer that reduces power before optics even become necessary.

$ALAB Astera Labs Astera sits at the rack and server bottleneck, where electrical signals degrade before they ever touch optical fabrics. Aries PCIe Gen 6 Smart Retimers and Taurus Smart Cable Modules are built for high-volume AI systems that need cleaner signal integrity. Revenue reached $270.6M in Q4 2025, supported by broad adoption of retimers. Role: rack-scale connectivity specialist where copper, memory, and optics intersect.

$MRVL Marvell Marvell dominates the PAM4 DSP layer inside AI optical transceivers. Its Nova platform is the first 1.6 Tbps PAM4 electro-optics solution, lifting bandwidth to 200 Gbps per lambda while cutting power and cost per bit by 30%. Q4 FY2026 revenue reached $2.219B, with data center optics and custom silicon doing much of the work. Role: brains inside pluggable optics for the 51.2T networking generation.

$MTSI MACOM MACOM is taking a different route by trying to remove DSPs from the equation. Its Linear Pluggable Optics architecture uses analog components like TIAs and VCSEL drivers to lower power and latency across dense Ethernet and InfiniBand networks. Revenue reached $271.6M in fiscal Q1 2026. Role: disruptive analog supplier challenging traditional optical architectures by cutting complexity at the module level.

Foundries & Manufacturing

$TSM TSMC TSMC controls the manufacturing backbone for advanced AI silicon, and photonics is becoming part of its packaging advantage. COUPE technology integrates optical interconnects alongside logic and can lower accelerator power consumption by 40% at the same speed versus older micro-bump approaches. CoWoS capacity target for 2026 was raised to roughly 127,000 wafers per month. Role: foundational fabricator of advanced photonic-electronic systems.

$GFS GlobalFoundries GlobalFoundries is becoming a serious pure-play silicon photonics foundry. It doubled full-year silicon photonics revenue to above $200M and secured a CPO design win for AI scale-up networks using its CLO platform. Management sees this segment nearly doubling again in 2026, aiming for a $1B run-rate by 2028. Role: specialist foundry translating silicon photonics designs into scalable production.

$FN Fabrinet Fabrinet is the outsourced assembly floor for a large part of the optics market. Precision alignment, packaging, and testing for 800G and 1.6T modules require a manufacturing skill set most designers do not own internally. Demand from hyperscalers is driving strong datacom activity, and Fabrinet’s footprint becomes more valuable as optical volumes ramp. Role: contract manufacturing bottleneck for advanced optical modules.

$TSEM Tower Semiconductor Tower brings analog and silicon photonics capacity tailored to advanced data-center interconnects. Q4 2025 revenue reached $440M with an 18% net profit margin, while management raised its long-term model to $2.84B revenue and $750M net profit by 2028. SiGe and photonics platforms are central here. Role: specialty foundry benefiting from the move toward 1.6T datacom and optical networking protocols.

Testing & Advanced Integration

$POET POET Technologies POET is one of the higher-beta names in the group, but the concept is interesting. Its optical engines integrate electronic and photonic components on a single interposer, targeting latency and thermal issues that limit conventional pluggables. A production order above $5M validated the platform, and management expects over 30,000 optical engines shipped in 2026. Role: advanced integration disruptor trying to redesign the module itself.

$AEHR Aehr Test Aehr is the testing gatekeeper. Silicon photonics devices run hot, fail early, and cannot be shipped into expensive AI systems without rigorous burn-in. FOX-XP systems let manufacturers test thousands of optical devices simultaneously at wafer level, which matters when 800G and 1.6T volumes ramp. A new global networking customer already placed an initial order for photonics-specific systems. Role: throughput enabler for reliability testing.

Foundational Materials & Equipment

$AXTI AXT Inc. AXT provides indium phosphide substrates, a foundational material for lasers used in high-speed optical transceivers. Q4 2025 indium phosphide revenue reached $8M, while backlog climbed above $60M. Management already increased capacity 25% and plans to double it by the end of 2026 through 6-inch wafer expansion. Role: raw-material bottleneck supplier. No indium phosphide, no laser scaling.

$SOI Soitec Soitec manufactures Photonics-SOI wafers, a required base layer for silicon photonics chips. Foundries cannot build optical components efficiently on standard bulk silicon, which makes this substrate highly strategic. Edge and Cloud AI revenue was up 29% over the first nine months of the fiscal year, and Smart Cut is helping the industry move to 300mm wafers. Role: foundational wafer supplier for silicon photonics scaling.

$IQE IQE plc IQE grows epitaxial layers needed for advanced datacenter lasers. Foundries usually do not own enough MOCVD capability to do this work internally, which makes IQE’s manufacturing capacity a chokepoint. Management entered 2026 with a visible Q1 order book and strong utilization across photonics lines. Role: outsourced epiwafer supplier supporting electro-absorption modulated lasers and other high-speed optical components.

$GLW Corning Corning provides the physical fiber connecting switches and transceivers inside AI clusters. Optical Communications sales reached $1.7B in Q4 2025, while segment net income rose 57%. A major customer also signed a $6B multi-year deal for advanced high-density fiber. Miniaturized glass cores matter because AI clusters require far more fiber in limited conduit space. Role: physical data pathway for the optical data center.