Optics stocks are climbing through Friday’s midday session, and the character of the move matters. Corning (NYSE:GLW | GLW Price Prediction) opened close to flat and then worked higher, with shares up roughly 4.5% intraday. Lumentum (NASDAQ:LITE) is up about 5%, and Applied Optoelectronics (NASDAQ:AAOI) is out front, up around 5%. Coherent (NYSE:COHR) is tacking on roughly 1.3%. This buying built intraday, absent any overnight press release.
A Rally Without a Same-Day Press Release
Traders are pricing off a well-defined earnings setup, with no confirmed same-day catalyst driving the optics leg higher. Lumentum reported Q4 revenue of $1.01 billion, up 109% year over year, on August 11, and guided Q1 FY27 revenue to $1.225 billion to $1.275 billion with EPS of $4.05 to $4.35, hitting its target operating model “more than a quarter ahead of schedule.” Coherent followed on August 12 with revenue of $2.05 billion, up 33.7% year over year, and non-GAAP EPS of $1.74. Applied Optoelectronics posted a fifth consecutive quarter of record revenue on August 6, with CEO Thompson Lin telling investors “demand will continue to outpace our production capacity through mid-2027.” Details are in Lumentum’s 8-K filing on SEC.gov.
There’s also tariff-protection chatter on social media following the August 4 reports of a possible U.S. ban on Chinese transceivers, which had already moved these names earlier this month. I could not verify a new optics tariff or transceiver ban announced today. Treat that as speculation, not fact.
Broadcom Sells Off While Component Suppliers Rally
The more interesting big name to watch today, Broadcom (NASDAQ:AVGO) is down roughly 4.7% even as the S&P 500 sits near a record high, the Nasdaq is in the green, and chipmakers are broadly higher. The plausible read, which I’d label as interpretation, is that the market is selling the entity carrying the financing risk while buying the component suppliers who benefit from more spend regardless of who ultimately writes the check.
That framing lines up with a Wolfe Research note dated Thursday, August 13 and recirculating today: “Wolfe Research on $AVGO: AI Financing Highlights Massive Revenue Opportunity but Long-Term Risk. Wolfe estimates Broadcom’s 14GW of planned OpenAI and Anthropic capacity in 2028 could represent roughly $140-200B of revenue, versus ~$245B of total consensus AVGO revenue that year. The key longer-term concern is Broadcom’s $30B of residual value guarantees, which could become meaningful if the AI industry ultimately overbuilds capacity, although Wolfe does not expect supply to exceed demand through 2028.” You can read the underlying post here.
In plain English, residual value guarantees mean Broadcom is effectively backstopping what the AI hardware is worth years from now. If capacity is overbuilt and the gear resells for less than assumed, Broadcom eats the shortfall. Wolfe frames this as a longer-term risk and, again, does not expect oversupply through 2028.
Position Sizes Are the Real Risk Here
These stocks move violently. Applied Optoelectronics is up 270% year to date and 465% over one year. Lumentum is up 138% YTD and 632% over a year.
Corning is up 81% YTD, though shares are still down about 15% over the past month, so today reads as a bounce inside a drawdown rather than a fresh high. Any hint of AI capex digestion will hit these names hard.
What to Watch
I’d keep an eye on whether Corning holds above its recent lows into the close and whether Broadcom stabilizes. If AVGO keeps bleeding while LITE, COHR, and AAOI hold their bids, the “buy the pick-and-shovel, sell the balance sheet” interpretation gets louder into next week.
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