5 Photonics Stocks Powering the AI Data Center Boom

Hyperscalers need faster links, lower power, and less copper drag. Below are 5 names positioned around lasers, optical engines, switches, and interconnect control.

$AAOI — Applied Optoelectronics

$AAOI is a pure-play hyperscale optics bet. The key signal is not headline sales, but the first large-volume 800G shipment to a major hyperscaler. Capacity plans are the real bull point: 5,000 ELSFP modules/month by end-2026, then 400,000/month by late 2027. If AI clusters keep pushing 800G/1.6T demand, $AAOI moves from niche supplier to scale player.

$LITE — Lumentum

$LITE sits near the bottleneck: indium phosphide lasers for advanced optical transceivers. Analysts said its lasers are effectively sold out through 2027, while the company carries $400M+ in optical circuit switch backlog. A separate multi-hundred-million-dollar co-packaged optics order targets early 2027 delivery. Scarcity is the thesis. Lasers are the toll road.

$COHR — Coherent

$COHR is a broad optical infrastructure lever. The cleaner bull thesis is mix and strategic relevance: Datacenter & Communications now represents about 75% of company sales, while NVIDIA made a $2B direct investment. Management sees optical circuit switching and next-gen pluggables adding $20B+ to serviceable market. Shortage in laser components gives $COHR pricing and capacity value.

$CRDO — Credo Technology

$CRDO is no longer just an electrical connectivity story. The DustPhotonics acquisition moves it closer to end-to-end optical signal control across AI data centers. Management is pushing three new product families and targets $500M+ in optical revenue by FY2027. The setup is margin expansion through optical, not just copper growth. Better position. Better TAM. Less commodity pressure.

$ALAB — Astera Labs

$ALAB is the photonics-adjacent pick: not a laser supplier, but a data-movement control layer for AI clusters. The bull thesis sits in CXL, PCIe, and high-speed connectivity around hyperscaler racks. Scorpio-X is designed for Trainium3 clusters, and the AWS/Anthropic hardware link gives $ALAB strategic gravity. In AI infrastructure, control of data flow can matter as much as compute.