
What happened
Zacks recommended Lumentum Holdings Inc., Coherent Corp., and MACOM Technology Solutions Holdings Inc., each carrying a Zacks Rank #1 or #2, noting strong short-term upside potential.
Why it matters
These stocks have already jumped year-to-date, and their products are essential for AI data centers—traditional copper wiring can't handle 400 Gbps to 800 Gbps speeds, but photonics can.
What to watch
Lumentum expects Q1 fiscal 2027 revenues between $1.225 billion and $1.275 billion, with the $1.25 billion midpoint implying over 130% year-over-year growth.
WHO IT HITSInvestors looking for near-term gains in AI-related tech stocks may find these three photonics companies as viable options, given their strong product positioning and current Zacks rankings.
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The demand for optical and photonics products is surging because large AI models require millions of GPUs working together, generating data throughput as high as 400 Gbps and 800 Gbps. Traditional copper wiring overheats and slows down AI compute clusters, but photonics transmits data at the speed of light through fiber-optic networks, offering high-speed, low-latency, and energy-efficient transfer. This positions photonics companies as critical suppliers to the AI infrastructure boom.
Lumentum, Coherent, and MACOM are highlighted as key players, with each holding a Zacks Rank #1 or #2. Lumentum, in particular, has a strong collaboration with NVIDIA to develop silicon photonics for its Spectrum-X switches, and its optical circuit switching shipments have already doubled from fiscal Q3 to Q4 2026. The company's guidance for Q1 fiscal 2027 points to another record revenue quarter, signaling sustained momentum.
The test for these stocks is whether they can sustain the year-to-date gains as AI data center spending continues. Lumentum's projected 130% year-over-year revenue growth, if realized, would confirm the scaling of photonics adoption. Investors should watch whether these companies can maintain their product leadership and meet the growing demand without supply constraints.
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