Author: Rhythm

The biggest winner at yesterday's Computex Taipei event was MRVL.

Jensen Huang invested over $6.5 billion in a large number of optics companies within three months, including Marvell (MRVL). At the event, Huang said Marvell would be "the next trillion-dollar company." MRVL's stock price surged 32.52% that day, with a trading volume exceeding 100 million shares, marking the company's largest single-day gain in history.

Incidentally, the entire optical module sector was ignited: Coherent rose 17.3%, Lumentum rose 13.3%, Corning rose nearly 12%, Ciena rose more than 8%, and Nokia also followed suit.

Regarding the logic behind optical modules, our team has already conducted an in-depth analysis. In our article "The AI ​​Era: A Moment of 'Great Famine' for Fiber Optics and Copper," published half a month ago, we clearly dissected the underlying logic of the physical limitations of copper cables, the fiber optic shortage, and the interconnection needs of AI data centers. The amount of fiber optic cable required by AI clusters is 36 times that of traditional CPU racks, and the expansion cycle for optical fiber preforms is 18 to 24 months, indicating a rigid supply constraint with no short-term solution.

MRVL surged 32% in a single day, closing at $290, with its market capitalization exceeding $250 billion; Nokia's AI optical network logic is also gaining increasing attention and becoming a frequently mentioned key stock. These two names seem to have become synonymous with optical modules.

However, our team at Rhythm wants to delve deeper, breaking down the optical module industry chain into sub-sectors to identify those targets that haven't yet been fully priced in by the market but still wield significant influence in their respective bottleneck segments. Many investors focus solely on 800G and 1.6T optical modules themselves, but the entire industry chain can be divided into at least six sub-sectors and levels, and we will select some targets within each sub-sector.

This will help readers find, besides MRVL and NOK, which other stocks in the US stock market's optics sector are truly worth paying attention to?

The stock selection methodology in this article is inspired by Serenity, the "new stock god of Wall Street." Serenity is currently the most prominent analyst of the "bottleneck theory" in the optical communication and AI supply chain. He is known for his "chokepoint" logic and specializes in uncovering hidden bottlenecks in the upstream of optical interconnects for AI data centers, rather than directly chasing large-cap stocks like Nvidia and Broadcom.

Fiber optic material: GLW (Corning)

This is the very bottom layer of the entire industry chain, and also the most difficult physical layer to replace. The core raw material for optical fiber is called the optical fiber preform, and its production expansion cycle is as long as 18 to 24 months, with extremely complex processes. The amount of optical fiber required for an AI data center is 36 times that of a traditional CPU rack, and the optical fiber requirement for a single project in the Meta Hyperion data center reached 8 million miles.

GLW

Corning is the world's leading fiber optic company, a true oligopoly. GLW currently has a market capitalization of approximately $172 billion and a share price of $197.

Founded in 1851, the inventor of low-loss optical fiber, no other company can replace its production capacity in the near future.

The core of Corning's competitive advantage lies in optical fiber preform manufacturing, a process that highly integrates materials science and precision manufacturing. Yield accumulation is measured in decades, and Corning has over 40 years of experience in this technology. Net profit from the optical communication business increased by 28% year-on-year in 2024, 71% in 2025, and surged by a staggering 93% in Q1 of 2026, with the growth rate still accelerating.

On May 6, 2026, NVIDIA and Corning announced a multi-year strategic partnership, with a total warrant investment of up to $3.2 billion. The partnership requires Corning to increase its U.S. optical connectivity manufacturing capacity tenfold and its fiber optic capacity by more than 50%, and to build three new factories. This is NVIDIA's largest single bet in the entire optical supply chain. Corning is also a supplier of fiber optics and connectors for Broadcom's CPO platform TH5-Bailly, serving as the common foundation for both CPO ecosystems.

Corning's stock price has surged over 315% in the past 12 months. Serenity has included Corning in its "Materials & Petroleum" supply chain bottleneck map, positioning it as a stable core holding.

Indium phosphide substrate: AXTI (AXT)

This is the most undervalued and Serenity's most famous call in the entire industry chain.

Why is indium phosphide (InP) so crucial? Because silicon cannot emit light. All lasers in optical modules require InP as a substrate material. Nvidia's optical connectivity chips, all high-speed transceivers, and the optical engines in CPOs all rely on InP wafers at their core. Even more critically, the growth process for InP single crystals is an order of magnitude more complex than that of silicon, with expansion cycles often exceeding two years, making it impossible to quickly resolve through massive capital investment.

Global InP substrate shipments are projected to reach 600,000 to 700,000 units by 2025, while actual market demand is estimated at 1.5 million to 2 million units. This supply gap exceeds 70% and is unlikely to be eliminated in the short term.

This layer is extremely concentrated, with three companies controlling 80-90% of the global market share: Sumitomo Electric Industries of Japan, JX Metals of Japan, and AXT of the United States.

AXTI

AXT controls 60-70% of the global InP substrate production, making it the largest single supplier in this oligopolistic market. AXTI currently has a market capitalization of approximately $7.2 billion and a share price of $116.

This is Serenity's signature piece, and one of his most frequently discussed targets (over 70 public tweets). His core assertion about AXTI can be summarized in one sentence: "The entire AI industry depends on this company; all players, including Google, Nvidia, and Microsoft, rely on its indium phosphide substrates. Without indium phosphide substrates, the entire story of optical interconnects for AI will end in 2026."

AXT is the world's largest single supplier of InP substrates, with customers including Google, Nvidia, Microsoft, and all major optical module manufacturers. In its Q1 2026 financial report, revenue reached $26.9 million, a 39% year-over-year increase, with InP revenue reaching $13.6 million. The company recently completed a $632.5 million funding round, specifically for expanding InP capacity, aiming to double it in both 2026 and 2027. Order demand is projected to approximately double in 2026 and then double again in 2027.

Serenity initially established a position around $12 with a target price of $150. As of this writing, it has reached nearly $141, representing a profit of over 1000%. This trade most clearly validates his methodology: companies with small market capitalization, client lists full of trillion-dollar giants, and whose products are the only upstream suppliers, once "discovered" by the market, exhibit growth potential several times greater than that of large-cap companies.

However, it is important to note that AXT's production lines are mainly located in China, which presents a geopolitical exposure to the supply chain, and this is a core risk variable.

Lasers and Optical Chips: LITE, COHR, MTSI

This is the manufacturing stage with the highest technological barrier in the optical module industry chain. In the AI ​​era, what is truly scarce is not the complete optical module, but the chip itself that generates the optical signal, namely EML (Electro-Absorbed Modulated Laser) and CW Laser (Continuous Wave Laser). A 1.6T optical module requires a 200G/lane EML, and only one company in the world is mass-producing this type of chip.

LITE

Lumentum is the only global supplier mass-producing 200G/lane EML; currently, there is no other company at this technology node. LITE currently has a market capitalization of approximately $700 billion and a share price of $1,025.

This represents the highest technological barrier and single-point monopoly in the current optical module market. Nvidia's large-scale pre-orders of this capacity have pushed delivery dates to after 2027, triggering supply shortages across the entire industry. Serenity lists LITE as the core benchmark of its optical wave narrative, and has repeatedly discussed its dual role in pluggable modules and CPOs in depth.

In March 2026, Nvidia invested $2 billion with multi-year procurement commitments worth billions of dollars. The backlog of OCS (Optical Path Switches) exceeded $400 million, and CPO (Consumer Point of Purchase) orders increased by hundreds of millions of dollars, with deliveries expected in the first half of 2027. FY2026 Q2 revenue reached $665.5 million, a year-over-year increase of 66%, with the company guiding year-over-year growth to exceed 85% in the next quarter. Once the Greensboro wafer fab is fully operational in early 2028, it will ultimately support $5 billion in annualized capacity. On Computex, the stock rose 13.3% to approximately $1025. Rothschild's target price is $1270, Jefferies' is $1200, and JPMorgan's is $1130.

COHR

Coherent is the most vertically integrated company in the optical device industry chain, owning the entire production line from InP raw materials to lasers to packaging to modules. Coherent currently has a market capitalization of approximately $66-73 billion and a stock price of $427.

Formerly known as II-VI Incorporated, founded in 1971, it was renamed after acquiring the original Coherent in 2022. Coherent's competitive advantage stems from something other companies cannot do: it owns the entire production line, from InP raw materials to lasers to packaging to modules. It is one of the world's largest InP system manufacturers, with its own InP wafer fabs, laser production lines, packaging, and module production capacity; no other company handles all four aspects in-house.

The book-to-bill ratio for the data center business has exceeded 4 for several quarters, indicating that demand far exceeds capacity. Nvidia has also invested $2 billion, along with multi-year procurement commitments. FY2026 Q3 revenue was $1.806 billion, a year-over-year increase of 21%. The expansion of its 6-inch InP production line is ahead of schedule. Its stock price has risen approximately 455% over the past 52 weeks. It will be included in the S&P 500 in early 2026, continuing to attract passive investment. Serenity has incorporated COHR into its core DCO and laser supply chain.

MTSI

MAACOM is a hidden leader in the field of high-frequency analog chips for optical modules. Many of the most difficult-to-replace components, such as TIAs (transimpedance amplifiers) and laser drivers, originate from MAACOM. MTSI currently has a market capitalization of approximately $26 billion and a stock price of $365.

What many people don't know is that the most expensive and hardest-to-replace components in optical modules aren't just DSPs, but also high-frequency analog chips like TIAs (transimpedance amplifiers) and laser drivers, many of which come from MACOM. The competitive landscape is quite concentrated because the design and process optimization of high-frequency analog circuits require years of experience; it's not a process that can be quickly replicated by simply throwing money at it.

MACOM's product roadmap covers the 1.6T and 3.2T ecosystems. FY2026 Q2 revenue reached $288.9 million, with Q3 guidance at a midpoint of approximately $335 million, and growth is accelerating. With a gross margin of 55.9%, it is one of the few small-to-mid-cap companies in the optical module industry chain with a stable and high gross margin. Serenity includes it in the analog/mixed-signal IC and optical module chain, positioning it as a hidden gem. EBC analysts call it "the cleanest mid-cap option for investors looking for optical exposure but not wanting to bear the vulnerabilities of pure broadcasting."

DSP chips: AVGO, MRVL, CRDO

In an 800G optical module, the DSP accounts for 30-40% of the cost, and its gross profit is much higher than that of the entire module. Often, the real money is made by the DSP company, not the optical module company. This layer is the most "semiconductor-based" link in the optical module industry chain, and the competitive landscape is determined by the accumulation of SerDes technology and customer certification barriers.

AVGO

Broadcom is the undisputed leader in optical module DSP chips and also the largest shipper of CPO switches. AVGO currently has a market capitalization of approximately $1.5 trillion and a stock price of $487.

Almost all high-end 800G and 1.6T solutions rely heavily on Broadcom's PAM4 DSP and SerDes, giving it a clear market dominance. Broadcom is also a leading advocate for CPO (Content on Portability) technology, having shipped over 50,000 Tomahawk 5 Bailly CPO switches in 2025. Its third-generation Tomahawk 6 Davisson boasts a switching capacity of 102.4 Tbps, making it the largest player in terms of CPO shipments.

Serenity listed AVGO as a downstream reference in the supply chain, alongside NVDA and MRVL, but stated that it was not his focus regarding the "small-cap bottleneck." Its large size and limited flexibility make it the "basic" ballast of this supply chain.

MRVL

Marvell, mentioned earlier as the stock personally selected by Jensen Huang at Computex, surged 32.52% that day, hitting a record high. MRVL currently has a market capitalization of approximately $250 billion and a share price of $290.79.

Following its acquisition of Inphi in 2021, Marvell's optical module DSP capabilities have significantly improved, with Marvell DSPs serving as the "brains" behind many 800G modules. In February 2026, the company completed the acquisitions of Celestial AI and XConn, building a complete technology stack covering silicon photonics, CPO optical engines, and CXL switches. It is currently the only company simultaneously covering four dimensions: custom ASICs, 1.6T optical DSPs, silicon photonics, and CXL switches.

Jensen Huang personally referred to MRVL as "the next trillion-dollar company" at Computex, causing its stock to surge 32.52% in a single day, pushing its market capitalization above $250 billion. Serenity actively holds its position and has repeatedly posted affirmations of MRVL's potential, while also highlighting valuation and confidence risks. FY2026 revenue was $8.2 billion, with data center business accounting for over 75%. Custom ASIC revenue is projected to exceed $10 billion in FY2029, with a FY2028 revenue target of $16.5 billion. In the short term, the stock price has significantly exceeded the consensus target price from sell-side analysts (average $222 vs. the post-surge $290), and the risk of overheating should be noted.

CRDO

Credo is the dominant player in the AEC (Active Cable Engagement) market, carving out a segment of the optical module market with copper cables. It boasts the most complex narrative within this industry chain. CRDO currently has a market capitalization of approximately $60-80 billion and a share price of $226.

The most notable product is the purple AEC (Active Cable Interchange), which uses copper cable to provide low-latency, short-distance connections, directly cutting into the market for pluggable optical modules. The core logic is that not all short-distance connections require optical fiber; AEC offers a win-win situation in terms of cost and latency in specific scenarios. FY2026 Q2 revenue reached $268 million, a year-on-year surge of 272%, and a year-to-date increase of over 120%. Serenity has incorporated it into the interconnect/switch chain, positioning it as highly flexible but with a complex narrative. With both potential for disruption and potential being disrupted, it is the most complex target in this industry chain.

Optical module assembly and manufacturing: AAOI, FN

This layer represents the most familiar track in the market, and it's also the most competitive and price-war-driven segment. Companies that succeed here either have vertical integration of upstream components (Coherent, Lumentum) or extreme manufacturing efficiency.

AAOI

AOI is the fastest-growing pure-play optical module supplier for 800G and 1.6T, and also one of the stocks most frequently recommended by Serenity, with over 123 public tweets. AAOI currently has a market capitalization of approximately $12-15 billion and a share price of $197.

This is one of the few pure optical module companies in the US, with its core logic being the purest and fastest-growing 800G module. In 2026, it secured orders exceeding $200 million (including from hyperscale cloud providers like AWS and Microsoft), with a full-year revenue target exceeding $1 billion. Its year-to-date increase is approximately 441%, making it the highest-performing stock in the entire optical module sector.

The trade-off for high elasticity is high concentration: revenue is concentrated in a few ultra-large clients, and any changes in order volume will be drastically reflected in the stock price. It is suitable for short-term speculation, but not for long-term holding.

FN

Fabrinet is the only large-scale player in the optical foundry industry, benefiting from the success of any other player. FN currently has a market capitalization of approximately $24 billion and a share price of $654.

This is the cleanest expression of the logic behind optical foundry. A large proportion of products from optical device manufacturers like LITE and COHR are manufactured by Fabrinet in Bangkok, Thailand. Fabrinet doesn't bet on a single technology route; it acts as a beta amplifier for the entire industry's expansion. Pluggable modules, CPOs, and OCSs all require precision optical packaging, and Fabrinet is the only foundry with sufficient scale in the field of precision optical packaging.

FY2026 Q3 revenue and EPS both hit record highs, with Q4 revenue guidance at $1.25 billion to $1.29 billion. The stock has seen a year-on-year increase of approximately 150%, exhibiting low volatility, making it suitable for core portfolio allocation.

Optical Network Equipment and Next-Generation Materials—NOK, LWLG

NOK

Nokia is the second most easily overlooked leader in this Computex rally, having acquired Infinera and now covering both DCI and AI backbone networks. Nokia currently has a market capitalization of approximately $900 billion and a share price of $16.25.

Serenity repeatedly mentioned NOK, discussing its connection with policy and supply chain, as well as its product portfolio after the Infinera acquisition. Following the acquisition of Infinera, Nokia became one of the few suppliers in the optical networking equipment market to simultaneously cover both "DCI data center interconnect" and "AI backbone network".

In Q1 2026, Nokia's optical networking business grew by 20% year-over-year, AI & Cloud-related sales grew by 49% year-over-year, Q1 profit grew by 54% year-over-year, and its stock price hit a 16-year high. New product lines include 1.6T coherent pluggable modules and compact amplifiers for multi-fiber applications, and the company is actively securing DCI orders from hyperscale cloud vendors. With a market capitalization of approximately $26 billion, it is a relatively undervalued second-leading player in this sector and an easily overlooked stock during Computex trading.

LWLG

Lightwave Logic is the smallest, most cutting-edge, and riskiest company on this list, betting that electro-optic polymers will become the standard material for next-generation silicon photonic modulators. LWLG currently has a market capitalization of approximately $1.7 billion and a share price of $12.67.

LWLG is not an optical module company; it makes next-generation modulator materials in silicon photonics—electro-optic polymers (EO polymers).

Traditional silicon-based modulators have bandwidths of 40-50GHz, while LWLG's polymer modulators target specifications above 110GHz, supporting 400G/lane, representing a 2-3 generation leap from existing technologies. In March 2026, LWLG signed an agreement with Tower Semiconductor to incorporate its polymer modulator solution into Tower's silicon photonics PDK, meaning any customer using Tower's production lines can directly utilize LWLG's material solutions. Currently, four Fortune 500 companies are developing Stage 3 prototypes, including a collaboration with a second Fortune 500 customer to develop a 400Gb/s CPO solution, with a commercial supply agreement expected in 2027. PhotonCap (a research account suspected to be from Serenity's optical engineering department) has written a research report specifically analyzing the collaboration between LWLG and Tower.

Logic: If EO polymers become the standard modulator material in silicon photonics, LWLG's IP licensing model will be a high-leverage winner. However, it currently has no substantial revenue, making it suitable for positions with extremely high risk tolerance, but not for core holdings.