3 Stocks to Buy Before Wall Street Catches On Before October Ends
Wall Street just sold off three AI infrastructure stocks hard, but their latest earnings tell a completely different story. The real AI build-out runs deeper than the obvious names, through optical lasers, custom silicon, and raw electricity.
The biggest AI names are already crowded. The expansion also runs through three less obvious layers: the lasers that move data, the custom chips that process it and the electricity that powers it.
Coherent (NYSE:COHR | COHR Price Prediction), Marvell Technology (NASDAQ:MRVL) and Vistra (NYSE:VST) are all growing fast on the same wave of demand, and the market just sold all three. Over the past month, Coherent fell 27.76%, Marvell dropped 6.35% and Vistra is down nearly 10% from its one-month high.
Their latest results point the other way.
Coherent Is Turning AI Traffic Into Light
Coherent makes the optical transceivers, indium phosphide lasers and co-packaged optics that carry data between processors and switches inside AI data centers. As clusters get bigger, copper can’t cover the distances, so optical links take over. The CEO, Jim Anderson, summed it up on the August earnings call: “AI runs on compute, but it scales on optical connectivity.”
Revenue for the fiscal fourth quarter reached $2.0455 billion, up 34%. Non-GAAP EPS came in at $1.74, beating the $1.62 estimate. The Datacenter & Communications segment made up 79% of sales. For the first quarter of fiscal 2027, management expects revenue of $2.2 billion to $2.4 billion.
NVIDIA (NASDAQ:NVDA) has announced a $2 billion equity investment in Coherent. Coming from the company at the center of AI hardware, that’s strong outside validation of Coherent’s technology. It does not come with a purchase commitment or a revenue guarantee. Shares traded around $232.26 on Tuesday, Oct. 20, and are still up 19.52% year to date.
Risk: With a P/E near 60, a miss would likely hit the stock hard. Coherent also carries $3.2 billion of long-term debt while it spends heavily to add capacity.
Marvell Is Building the Custom Chips Hyperscalers Want
Marvell designs custom AI accelerators for cloud giants, plus the optical DSPs and switches that connect them. Revenue for the second quarter of fiscal 2027 rose 37% to $2.739 billion. Non-GAAP EPS of 94 cents beat the 93-cent estimate. Q3 guidance calls for $3.150 billion in revenue, plus or minus 5%.
At its Oct. 6 investor day, Marvell set a fiscal 2028 revenue target of about $20 billion and a fiscal 2031 target of $70 billion to $90 billion. These are company goals several years out, and they depend on customer programs ramping on schedule. We treat them as long-range dreams. They also show how big management thinks the custom chip business has become since it expanded its agreement with a major hyperscaler, which the CEO called “game-changing”.
The stock traded around $241.38 on Oct. 20, even after a more than 170% year-to-date run. The case rests on fiscal 2029 and beyond, where management sees “a lot of upside bias” in custom revenue.
Risk: A small number of hyperscalers drive most data center sales. Management also expects gross margin to dip from the prior quarter in the third quarter as custom silicon ramps.
Vistra Sells the Power AI Data Centers Need
Revenue fell to $4.017 million from $4.250 million a year earlier. Over the same period, adjusted EBITDA rose 31% to $1,767 million. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, with items like unrealized hedge swings also stripped out. It’s a rough measure of operating cash earnings and runs far above net income, which was $305 million.
Hedging explains the gap. Vistra uses derivatives to lock in prices for its future output, and it has to revalue those contracts every quarter. This quarter that revaluation produced $472 million of unrealized losses, which exist only on paper. Adjusted EBITDA leaves those swings out and shows what the power plants actually earned, helped by realized prices about five percent higher.
Management confirmed 2026 adjusted EBITDA guidance of $6.8 billion to $7.6 billion. Vistra has also committed up to $1.0 billion to a joint venture that includes NVIDIA, where Vistra is the preferred power provider. Shares traded around $150.39 on Oct. 20, down nearly 9% year to date. Of the three, Vistra’s price falls behind its growth the most.
Risk: Vistra’s risks differ from those of the two chip and component suppliers. Its earnings depend on power prices, weather and grid regulation. The CFO said 2027 is “trending towards the lower end” of its range because ERCOT forward prices fell. Third-quarter results are due Nov. 6.
What October’s Selloff Means for AI Infrastructure Investors
All three companies reported strong growth and confident guidance, and all three sold off anyway. Coherent and Marvell offer faster growth, along with the risk of depending on a few customers and tight supply. Vistra offers hedged cash flow tied to power markets. Right now the business results are improving faster than the share prices.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
