CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
Photonics still has room for a memory-type run because new laser capacity takes years to reach customers. Despite the sector's big gains, the upside still looks enormous: Lumentum's CEO says it is effectively sold out through early 2029, versus 2028 a few months ago. It cannot meet about 70% of demand for some products through next year and about 30% for others through 2028; relief is not expected before 2029-30. x.comÂ
Lumentum, Applied Optoelectronics and Coherent still have room to run as the optical buildout remains early and capacity trails demand. StockSavvyShay relays Lumentum CEO Michael Hurlston's statement that the company can supply only 30% of what it is asked to supply, adding scale to the laser-shortage case. x.comÂ
Optics and photonics should be among AI's biggest winners as faster GPU networks need optical connections that suppliers cannot expand quickly enough. Lumentum says some components are sold out through early 2029; Sivers is investing $30M to target more than 100M lasers a year, with operations expected in Q4 2027. Potential US restrictions on Chinese transceivers could reshape supply in 2027. Applied Optoelectronics and Sivers are the favorites. x.com x.comÂ
Lumentum's AI-optics case gains longer supply visibility: CEO Michael Hurlston says capacity is effectively sold out through early 2029 and expects roughly 70% of demand for some products to go unmet through 2027; others could face roughly 30% unmet demand through 2028. Scarcity could support pricing, but earnings growth depends on capacity expansion and yield improvements translating into shipments, revenue and margins. x.comÂ
The photonics-as-AI-bottleneck claim has faded, leaving Lumentum facing more pain before the theme recovers. A large December options node sits at $600; the stock bot targets downside at $650 and $595, with $581 a possible liquidity sweep where smart money would buy instead of rushing in at $650 or $630. Most photonics companies will likely never come back. x.comÂ
Optical suppliers face demand beyond capacity, strengthening the sector's case for the coming months. Lumentum's CEO says it is effectively sold out through early 2029; Ciena says lead times limit growth, and Coherent cites constraints across nearly every product line. Applied Optoelectronics doubled its share count to expand capacity and meet demand. Soitec raised guidance twice this year; Marvell raised guidance and its 2030 TAM, while Broadcom sees 4x EPS by 2030 on visible demand. x.comÂ
Lumentum remains attractive as its CEO says it is completely sold out through early 2029, extending his earlier 2028 horizon despite roughly 12x growth at its main Japan factory in two years. New laser capacity takes three to five years to build, and hyperscalers are helping fund expansion through long-term commitments, pointing to persistent supply pressure. x.comÂ
Wafer-tested VCSEL arrays could erode Lumentum's laser scarcity premium if scale-up links adopt wide, parallel designs. Lumentum's in-rack demo used arrays but does not replace every high-power laser; Credo and ams OSRAM seek approval for a parallel-link standard in 2027. Multiple suppliers would pressure pricing power and margins. Near-term earnings could still benefit from laser shortages, with Lumentum sold out through early 2029. x.comÂ
Marvell risks paying a peak-scarcity price for Lumentum if optical supply catches up by 2028-30. The proposed ~$99B deal values Lumentum at roughly 20x guided annualized revenue and 58x estimated after-tax operating income, while Lumentum, Coherent and Chinese suppliers are adding laser capacity. The DSP-and-laser combination has strategic logic, but durable scarcity economics and Nvidia's response remain uncertain. x.comÂ
Photonics stocks remain attractive as AI optical-component demand exceeds supply: Lumentum's CEO says the company cannot meet 70% of demand for some products through 2027 or 30% for others through 2028, with some components sold out into early 2029. The cited basket is LITE, MRVL, AAOI, COHR, SIVE and AEHR. x.comÂ
Photonics stocks such as Coherent, Lumentum, Corning, Applied Optoelectronics and Ciena are priced on unknown future demand rather than current results. Lumentum's revenue has been flat, yet projections for the year ending June 2029 call for $12.8 billion, over 4x this year's $2.96 billion. That is great if true, but a lot can happen before then, especially any disruption to the data-center buildout boom. x.comÂ
Photonics suppliers ride the same curves Marvell just laid out through 2030. Marvell targets $70-90B of fiscal 2031 revenue from $8.2B last year, with a TAM 4x its last investor day and interconnect the biggest segment at about $37.5B. Supply is tight: Lumentum's CEO says it can meet only 30% of customer demand next year, and Coherent is booked through 2027. @AsymmetricBets_ applied Marvell's model to Lumentum, Coherent, Applied Optoelectronics, Ciena, Tower Semiconductor and Astera Labs. x.comÂ
