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Applied Optoelectronics (AAOI) shares rose on strong Q1FY26 earnings, indicating 51% year-over-year revenue growth driven by demand for 800G transceivers for AI data centers.
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Lumentum (LITE) shares rose as the company’s fiscal third-quarter guidance projects more than 85% year-over-year growth, extending a historic rally in optical networking components.
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Coherent (COHR) stock rallied on strength in the data center segment, expanding partnership with NVIDIA (NVDA), and inclusion in the S&P 500, fueling momentum in AI capital spending.
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The optical networking complex is rising at midday on Monday, with the group’s three marquee names posting double-digit gains. Applied Optoelectronics (NASDAQ:AAOI) leads the basket, up 24% to $184.51, while lument (NASDAQ:LITE) is trading 17% closer to $1,057. Consistent (NYSE:COHR) completes the trio, up 13% to approximately $377.60.
The rally is essentially a reflection of the pullback that hit the entire sector last Thursday, when shares of AAOI, LITE and COHR fell sharply in unison. Today’s offering reflects renewed enthusiasm for AI data center capital spending and the optical connectivity layer that links hyperscale GPU clusters.
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So far this year, Applied Optoelectronics shares are up 420%, Lumentum shares are up 184%, and Coherent has gained 104%. Over the past year, those moves extend to 1,136%, 1,516%, and 435%, respectively, for AAOI, LITE, and COHR stock.
Applied Optoelectronics leads the group
Applied Optoelectronics is the highlight of the day, with AAOI shares advancing from Friday’s close to $148.94. The move follows the company’s fiscal 2026 first quarter report last week and a sharp drop in the same session.
Applied Optoelectronics posted revenue of $151.14 million in Q1FY26, growing 51% year-on-year due to growing demand for 800G transceivers used in AI workloads. The data center segment more than doubled to $81.4 million, including the first volume shipment of Applied Optoelectronics 800G products to a large hyperscale customer.
Management guided second-quarter revenue to $180 million to $198 million and noted significantly higher sequential growth beginning in the third quarter as expanded Houston capacity comes online. Applied Optoelectronics CEO Thompson Lin highlighted “strong customer engagement around our 800G transceivers and 1.6Tb products” as investments in AI-powered data centers accelerate.
Lumentum expands its historical trajectory
Lumentum is rallying from Friday’s close near $904, extending one of the most extreme rallies in the entire optical components space. February’s fiscal second quarter 2026 report still supports LITE’s bull case.
Lumentum’s fiscal second-quarter revenue of $665.5 million grew 66% year over year, with non-GAAP earnings per share of $1.67 beating the consensus of $1.41. Guidance for the fiscal third quarter of fiscal 2026 calls for revenue between $780 million and $830 million, implying growth of more than 85% year-over-year.
Retail sentiment leans toward the same narrative. A widely read post on r/StockMarket argued that “Lumentum and Coherent are the only real ways to make that shift” as GPU clusters scale, generating 81 comments and a Reddit sentiment score of 82 rated as very bullish.
Coherent completes the rally
Coherent reported fiscal third-quarter fiscal 2026 results last week, with revenue of $1.806 billion growing 21% year-over-year. Non-GAAP EPS of $1.41 marked Coherent’s fourth consecutive result.
The company’s data center and communications segment reached $1.36 billion, or 75% of revenue, with growth of 41%. Coherent’s growing partnership with NVIDIA, which includes a $2 billion investment by the chipmaker, sets a roadmap that includes doubling domestic indium phosphide production by the end of the year.
Coherent recently joined the S&P 500, with CEO Jim Anderson citing “exceptionally strong demand in our communications and data center businesses.” Coherent’s fiscal 2026 fourth-quarter guidance of $1.91 billion to $2.05 billion keeps the AI demand thesis on track for COHR stock.
What to watch next
Bearish comments are also part of the conversation. A counterpoint r/stocks post asked, “Is there any value left in the AI supply chain?”, noting that Coherent, Lumentum, and Ciena (NYSE:CIEN) shares are up 200% to 400% in 12 months with gross margins that don’t justify the multiples. After parabolic gains, the bar for continued upside is high.
The optical complex has now shown that it can swing in either direction by double digits in just a few sessions, with last Thursday’s coordinated sell-off and today’s coordinated breakout capping it off. Customer concentration with a handful of hyperscalers means any pause in AI capital spending could hit Applied Optoelectronics, Lumentum and Coherent simultaneously.
Keep an eye on whether the group sustains earnings through the close, the next round of sell-side price target revisions, and comments on the hyperscaler’s capex. AAOI’s Q3 capacity ramp, Lumentum’s upcoming quarterly update, and Coherent’s co-packaged optics and circuit switching revenue contribution through 2027 are the next real catalysts.
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