Applied Optoelectronics Sinks 16%, Coherent Tumbles 14% Despite Strong Outlook, Lumentum Plunges 13% as AI Optical Stocks Slide

AI optical stocks are falling for a second straight session, and strong earnings across the group aren’t slowing the selling. Applied Optoelectronics (NASDAQ:AAOI) stock recently traded at $50, down 16%. Over the past month, Applied Optoelectronics stock has fallen 59%.

Meanwhile, Coherent (NYSE:COHR | COHR Price Prediction) stock is at $168.61, down 14%, despite a beat-and-raise report. Lumentum (NASDAQ:LITE) stock is at $543.99, down 13%. Both names are caught in a broad AI infrastructure selloff after Democrats swept Congress, which Reuters reported has fueled concerns about hurdles to data center expansion.

Election Fears Drag Down the Optical Supply Chain

AI-linked stocks began falling on November 4 as results showed Democrats winning both houses of Congress. Investors appear worried about tighter data center rules and a slower build-out, which could hit suppliers such as Applied Optoelectronics (the power, cooling, and networking names behind the data centers are the focus of a free report on seven AI infrastructure suppliers). Qualcomm added pressure by warning about rising memory costs. Bloomberg reported that Micron Technology paused a Taiwan plant.

Applied Optoelectronics is falling despite strong momentum of its own. The company disclosed on August 6 that its Q2 2026 revenue rose 86.4% year over year (YoY) to $191.92 million, its fifth straight record quarter. Management guided its Q3 2026 revenue to $255 million to $290 million and stated forecast demand would outpace production capacity through mid-2027.

Coherent Reverses Its Beat-and-Raise Gain

Strong results haven’t protected Coherent stock. According to StockStory, Coherent’s Q1 FY2027 revenue reached $2.37 billion against a $2.31 billion consensus, while adjusted EPS of $2.09 exceeded the $1.97 estimate. For Q2 FY2027, Coherent expects its revenue to land between $2.55 billion and $2.75 billion, a range that topped estimates, citing S&P data. Chief executive Jim Anderson forecast Coherent’s fiscal 2027 pro forma revenue growth above 60%.

Coherent stock initially rose 5% after the November 4 release. The reversal may reflect Coherent’s heavy capacity spending. Q1 capital spending at Coherent reached $776 million, up from $104 million a year earlier. Coherent’s free cash flow for the quarter came in at -$868.2 million.

Lumentum, Ciena and Fabrinet Fall Together

Lumentum carries deal news that the rest of the group doesn’t. Marvell Technology (NASDAQ:MRVL) agreed to buy Lumentum, The Wall Street Journal reported on November 2. Barron’s asked on November 3 whether the Marvell merger could fall apart after both stocks lost significant value.

Ciena (NYSE:CIEN) stock is at $234.98, down 14%. Fabrinet (NYSE:FN) stock is at $296.26, down 13%. On September 3, Ciena raised its fiscal 2026 revenue guidance, and Fabrinet’s Q1 FY2027 revenue rose 50.7% YoY in results released November 2. With Applied Optoelectronics posting the worst decline and every other name down double digits, sellers appear to be treating the optical supply chain as one trade, regardless of company-specific news.

How Applied Optoelectronics Differs From Coherent and Lumentum

Applied Optoelectronics is a vertically integrated transceiver maker built on its own laser technology, and it sells to both hyperscale data centers and cable TV operators. That cable exposure gives the company a revenue stream outside AI data centers. Management has also presented its Texas manufacturing base as a key draw for customers seeking U.S. production.

Coherent runs a far broader photonics platform covering transceivers, lasers and engineered materials, with an industrial business serving semiconductor equipment makers. Lumentum leans on optical components such as pump lasers, plus systems like optical circuit switches. Ciena sells complete optical networking systems, while Fabrinet builds modules for other companies as a contract manufacturer.

What Could Decide the Next Move for Applied Optoelectronics

Applied Optoelectronics’ upcoming Q3 report will show whether its capacity ramp and new 1.6T orders are converting into revenue. Investors leaning bullish can note management’s view that demand exceeds capacity, along with Anderson’s comment that Coherent’s calendar 2027 is “basically booked out.” The bears can cite customer concentration, since the top 10 customers made up 99% of Applied Optoelectronics’ Q2 revenue.

Applied Optoelectronics also posted a generally accepted accounting principles (GAAP) net loss of $22.8 million in Q2 and has funded its expansion partly through equity sales. Fresh weekly jobless claims data arrives alongside the selloff, and the October payrolls report is due November 6, adding macro signals for the optical group to absorb. It may make sense to stay cautious while the post-election AI infrastructure selloff plays out.

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