Nvidia's $2 billion（約3200億円） investment in optical networking company Coherent highlights a crucial but overlooked AI infrastructure need: the fiber-optic cables and components that connect data centers faster than traditional copper wiring.

What happened: Nvidia invested $2 billion（約3200億円） in Coherent, a major photonics company that manufactures optical transceivers and components converting electronic data into light signals for transmission through fiber-optic cables. Coherent's stock has rallied about 30% since the announcement in early March. The company, which rebranded after acquiring the original Coherent in 2022, generates most revenue from its optical networking business and recently received $50 million（約80億円） in CHIPS and Science Act funding to expand its manufacturing plant in Sherman, Texas.

Why it matters: Data centers are upgrading from older copper wires—which are too slow and generate too much heat for modern cloud and AI applications—to faster fiber-optic components. Coherent's optical segment, once a slower-growth cyclical business, has become its core growth engine as cloud and AI markets expand. In fiscal 2025, Coherent's revenue rose 23%, and analysts expect it to grow at a 31% CAGR from fiscal 2025 to fiscal 2028, driven by rising sales of ultra-fast 800G, 1.6T, and next-generation 3.2T optical products to data centers.

What to watch: Coherent's valuation is 65 times next year's earnings, which is premium, but analysts expect the company's EPS to turn positive in fiscal 2026 and grow at a 52% CAGR over the following two years. If you believe the AI market will keep expanding over the next decade, the company may be worth buying before it attracts even more investor attention.