AI data center operators are staring down a bandwidth wall, and the fastest way over it runs through glass, not copper. Coherent alone just reported its Datacenter & Communications segment hit $1.362 billion in revenue, up 40.6% year-over-year, now 75% of total revenue versus 41% pro forma a year earlier. That is the shape of a spending wave that has not crested. Here are the five optical chip names positioned to catch it.
1. POET Technologies (The Surprise Lead)
POET Technologies (NASDAQ:POET) is the smallest name on this list and the one with the most torque to the 800G/1.6T transition. Its Optical Interposer platform packages lasers, detectors, and photonic ICs onto a single substrate, exactly the kind of integration hyperscalers need to hit next-generation bandwidth without frying their power budgets. The story is no longer purely speculative: management now says it expects to ship more than 30,000 optical engines in 2026, with high-volume 800G production beginning in Q3 2026 from Malaysia.
The numbers are early but the slope is steep. Q1 FY26 revenue came in at $503,389, up 201.9% year-over-year, beating the $347,970 estimate by 44.66%. The Lumilens supply agreement is anchored by an initial $50 million purchase order for EOI-based optical engines, with potential to scale beyond $500 million over five years. And POET ended the last reported period with roughly $430 million in cash after raising about $375 million gross, meaning the ramp is funded.
Shares are up 16.06% year to date even after falling 24.32% over the past month. The pullback is where the asymmetry lives. The obvious question: Who is capturing the volume that POET is only beginning to feed?
2. Coherent (The Heavyweight)
Coherent (NYSE:COHR | COHR Price Prediction) is the name every institutional desk already owns. It is the largest merchant supplier of optical transceivers into hyperscale data centers, the recipient of a $2 billion NVIDIA investment tied to US manufacturing, and a fresh addition to the S&P 500. When Jensen Huang talks about scaling AI infrastructure, this is one of the two or three companies that physically has to say yes.
The most recent quarter tells the story in three data points. Revenue reached $1.805 billion, up 20.5% year-over-year. The Datacenter & Communications segment specifically grew 40.6% year-over-year to $1.362 billion, or 75% of total revenue. And non-GAAP operating margin expanded to 20.3% from 18.6% a year earlier, with management guiding Q4 FY26 revenue to $1.91 billion to $2.05 billion.
Shares are up 66.98% year to date and 246.24% over the past year. The stock trades at roughly 38x forward earnings, which is what leadership costs. Owning the merchant leader is the safe way to play the theme. Owning the manufacturer behind the merchant leader is a different trade entirely.
3. Fabrinet (The Picks and Shovels)
Fabrinet (NYSE:FN) does not design chips. It builds them, in exacting volume, for the companies that do. Fabrinet is the contract manufacturer behind a startling share of the world’s high-speed optical transceivers, and its book has been dominated by NVIDIA’s networking silicon and AWS-linked datacom programs. When hyperscalers order more 800G and 1.6T ports, Fabrinet’s line utilization is the tell.
Q3 FY26 revenue came in at $1.214 billion, up 39.29% year-over-year and beating estimates by 2.22%, with non-GAAP EPS of $3.72, a beat of 4.42%. It is the fourth consecutive quarter of EPS beats. Capex nearly doubled to $63.76 million, up 121.35% year-over-year, which is management shouting, without a press release, that customer demand is filling their forward capacity.
The stock is down 1.73.% this year but up 62.88% over the past year. It has pulled back nearly 19% in the last month. The average analyst price target sits at $749.11. This is the entry window that only shows up when the market briefly forgets what the capex line is signaling. Now for the name most investors wrote off two years ago.
4. IPG Photonics (The Turnaround With a Second Act)
IPG Photonics (NASDAQ:IPGP) built its empire on high-power fiber lasers for industrial welding and cutting. That legacy is why the stock is still down 47.91% over five years. But under a new CEO, IPG is redeploying its laser and semiconductor stack into medical, defense, and micromachining, and its fiber and pump-laser expertise is quietly finding its way into next-generation datacenter photonics roadmaps. The market is starting to reprice the option.
Q1 FY26 revenue reached $265.5 million, up 16.6% year-over-year and beating estimates by 3.33%, with emerging growth products now 53% of revenue. Book-to-bill has stayed firmly above one for a second consecutive quarter, and North America revenue rose 27% year-over-year. The board just authorized a new $100 million buyback, and R&D climbed to $33.3 million from $28.3 million, a rare combination of capital return and reinvestment.
Shares are up 43.95% year to date and 43.56% over the past year, with an average analyst price target of $130.50. If you are looking for a Coherent-like re-rating that has not fully played out, this is the mirror image. And it sets up the payoff.
5. nLIGHT (The Payoff)
nLIGHT (NASDAQ:LASR) is the trade that hides in plain sight. On paper it is a defense laser company, and yes, it just unveiled a 70kW-class laser weapon system. But the fiber laser and semiconductor laser technology that arms directed-energy platforms is the same physics that pumps the optical engines feeding hyperscale AI clusters. nLIGHT sits at the intersection of two of the most inelastic spending buckets in the market: Pentagon directed-energy and AI infrastructure.
The Q1 FY26 print was the loudest on this list. Revenue hit $80.18 million, up 55.2% year-over-year, beating by 11.15%. Non-GAAP EPS came in at 22 cents versus the 8 cents expected, a beat of 160.66%. Aerospace & Defense revenue reached $55.13 million, up 68.6% year-over-year, with defense product revenue nearly doubling to a record $33.10 million. Gross margin expanded to 33.1% from 26.7%, and adjusted EBITDA swung to $13.83 million from $0.116 million.
The stock is up 87.78% year to date and 287.99% over the past year, with the average analyst target at $89.29. CEO Scott Keeney flagged a “pipeline of directed energy opportunities” that has not yet fully hit the income statement. The datacenter angle is the free option nobody is charging for yet.
The Setup
The AI datacenter bandwidth story is not a single-name trade. It is a stack: interposer engines (POET), merchant transceivers (Coherent), contract manufacturing (Fabrinet), fiber laser reinvention (IPG), and the defense-plus-datacenter wild card (nLIGHT). Coherent’s segment growth, Fabrinet’s capex doubling, and nLIGHT’s triple-digit EPS surprise are all pointing at the same underlying reality: the pipe between GPUs is where the next leg of AI capex lands. The window to position ahead of the next round of hyperscaler capex announcements is narrower than the pullbacks suggest.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks