Sung Cho, co-head of public technology investing at Goldman Sachs Asset Management, stated that the focus of AI investment is shifting from graphics processing units (GPUs) to optical communication and fiber optic equipment manufacturers that connect AI. He is particularly optimistic about Lumentum (LITE) and Coherent (COHR).

Cho believes that as AI workloads shift from training to inference, more data centers closer to customers will be needed, which will lead to a surge in demand for connections between data centers. Currently, connections are primarily made via copper wires, but in the future, they will increasingly be replaced by optical communication. Since optical communication production capacity is difficult to expand quickly, the trading cycle for related stocks may be longer than previous semiconductor cycles.

Lumentum's revenue reached $808.4 million in the third quarter of fiscal year 2026, a year-over-year increase of 90.1%, with non-GAAP earnings per share of $2.37. Coherent's revenue for the same period was $1.81 billion, a year-over-year increase of 20.5%, with its data center and communications business growing by 40.6%. NVIDIA (Nvidia) has invested $2 billion in Coherent to deepen cooperation in laser and optical networking equipment.