Lumentum and Applied Optoelectronics Fall 4% as Microsoft Pushes Back on Ban on Chinese Optical Parts; Coherent Holds Steady

Two U.S. optical suppliers that have fueled the expansion of AI data centers are losing ground as AI hardware stocks retreat and a fight over Chinese transceivers reaches the White House. Lumentum (NASDAQ:LITE | LITE Price Prediction) stock is at $623.58 in Thursday’s afternoon trading, down 4%. Applied Optoelectronics (NASDAQ:AAOI) stock is trading at $53.89, down 4%.

The broader selloff follows a shock at the top of the AI chip industry. NVIDIA‘s (NASDAQ:NVDA) board announced on November 12 that Jensen Huang had resigned as president, chief executive and a board member. As the target of Marvell Technology’s proposed acquisition, which Reuters valued at $115 billion, Lumentum also carries deal context.

Microsoft’s White House Pushback Challenges the Optical Ban Thesis

Microsoft (NASDAQ:MSFT) and a handful of other companies reportedly met with White House officials on the evening of November 10 to raise concerns about a proposed Federal Communications Commission (FCC) ban on new models of Chinese-made optical transceivers. Those modules move data over fiber-optic cables inside AI data centers, and the companies said that the ban could slow data center expansion. Microsoft declined to comment.

China holds an estimated two-thirds of the global optical transceiver market. That concentration is why Lumentum and Applied Optoelectronics stand to gain if Chinese supply contracts, so pushback from a major buyer works against that thesis. Applied Optoelectronics has a direct tie to that buyer, since Microsoft accounted for 28.8% of the company’s revenue in 2025. Lumentum and Applied Optoelectronics are falling alongside the wider AI retreat, so the meeting is one source of pressure among several. (These transceiver makers are exactly the kind of non-chip AI suppliers we profiled in a free report on seven companies powering the data center buildout.)

Several details limit the draft’s reach. It would cover only new Chinese models, would exempt installed equipment and has no FCC vote date. A 3.2 terabit-per-second speed threshold is reportedly under consideration, and Morgan Stanley expects products at that speed to start ramping in 2028. Current 800G and 1.6T builds that fill Lumentum and Applied Optoelectronics order books may be unaffected.

Coherent Holds Steady While Lumentum and Applied Optoelectronics Slide

Coherent (NYSE:COHR) stock is at $234.44, essentially unchanged. That leaves the photonics maker holding most of a 9% gain from November 11, when CoreWeave’s results renewed the AI trade. Lumentum rallied 11% on November 11 as well, before turning lower.

Unlike Applied Optoelectronics and Lumentum, Coherent is holding its level. Both losers are pitched as U.S. beneficiaries of any ban, which ties them more directly to the transceiver debate. A broader, vertically integrated mix leaves Coherent less tied to any single optical-parts category, which may help explain the gap.

How Lumentum, Applied Optoelectronics and Coherent Build Their Businesses

Lumentum builds lasers, cloud transceiver modules and optical circuit switches, with pump lasers and switches leading its latest growth. Applied Optoelectronics sells transceivers to large hyperscale operators and runs a cable television broadband business, with manufacturing in Sugar Land, Texas; Taipei, Taiwan; and Ningbo, China. Coherent runs a photonics platform that extends from materials and crystal growth through optics and lasers, and it also sells into industrial markets. NVIDIA is a strategic customer, through a multi-year supply agreement for Coherent’s advanced lasers and optical networking products.

On an earlier earnings call, Lumentum CEO Michael Hurlston argued that Chinese rivals haven’t shown scale in lasers: “I caution that many of the Chinese laser suppliers are not delivering in the market today, and we have not seen significant output from them to date.” Jim Anderson, Coherent’s CEO, framed his company’s edge around breadth, saying, “We believe this breadth and depth differentiates us.”

What Comes Next for the FCC’s Chinese Transceiver Draft

The next test for Lumentum is whether a published FCC rule keeps the proposed speed threshold and the exemption for installed gear. A tighter rule could support pricing for U.S. suppliers, and Lumentum describes its optoelectronic capacity as “effectively sold out well into the future.” Applied Optoelectronics’ management expects demand for its high-speed modules to exceed production capacity throughout 2027.

Should the FCC postpone or narrow the draft, the case that U.S. makers gain share from Chinese rivals could weaken. NVIDIA’s leadership change adds a separate layer of uncertainty for AI hardware names, Lumentum and Applied Optoelectronics among them. The FCC’s decision on Chinese transceivers could clear up how much of the U.S. supplier thesis holds up.

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