A new wave of artificial intelligence-linked stocks is emerging, with optical technology companies outperforming the broader market over the past year.
This surge has been driven by growing demand for faster data transmission. Companies such as Lumentum (NASDAQ: LITE) have led the rally, posting a staggering 1,137% gain over the last 12 months, making it one of the top-performing stocks in the S&P 500.
Applied Optoelectronics (NASDAQ: AAOI) has risen 551%, Coherent (NYSE: COHR) is up 282%, Corning (NYSE: GLW) has gained 223%, and Fabrinet (NYSE: FN) has rallied 176% over the same period.
This performance stands in contrast to the broader Nasdaq 100, which returned 23% during the same timeframe, highlighting the intensity of investor interest in this niche segment of the AI ecosystem.
Why optical stocks are rallying
Notably, the rally has been fueled by the critical role these companies play in next-generation AI infrastructure. Optical components, which use light instead of copper wiring, are becoming essential in data centers to handle massive data flows efficiently.
The shift from copper to optical solutions is accelerating as the industry works to overcome power and bandwidth limitations in ever-larger AI clusters.
Technologies such as 1.6T transceivers, co-packaged optics (CPO), and optical circuit switches (OCS) are at the forefront, supporting faster and more energy-efficient data movement between GPUs and across racks.
At the same time, momentum has been reinforced by hyperscalers’ massive capital expenditures, projected to exceed $430 billion in 2026 alone.
Investor enthusiasm received an additional boost in early March when Nvidia (NASDAQ: NVDA) announced plans to invest $2 billion each in Lumentum and Coherent, signaling strong confidence from a leading AI chipmaker in the long-term importance of optical networking solutions.
Meanwhile, Bank of America analysts have projected roughly 10% annual growth in the optical transport market for both 2026 and 2027, describing it as an “AI supercycle” supported by tight supply conditions and long lead times for capacity expansions.
However, some volatility has emerged, with profit-taking in late March amid broader semiconductor weakness, although momentum has since rebounded on continued positive order flow and strong demonstrations at OFC.
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