Jeff Pu
Technology Equity Analyst at GF Securities
Bizlink is a beneficiary of Nvidia's faster-than-expected co-packaged optics ramp, because CPO carries higher content for it than near-packaged optics. Spectrum-X CPO switches are in mass production as key component yields improve, with scale-out switch shipments forecast at 15k in 4Q26 and 100k in 2027. Scale-up optical engine estimates were revised to 6.5m in 2027 and 42m in 2028, as NVL576 is intact but Trainium 4 is slower. Full NPO adoption is retained for the cycle. x.com x.comÂ
Nvidia's Spectrum-X CPO scale-out switches are now in mass production, driving an optical-engine ramp for Lumentum, Coherent, Browave, Semtech, Marvell and Tower Semiconductor. Forecasts are 15k CPO switches in 2026 and 100k in 2027, Nvidia optical engines of 6m in 2027 and 19m in 2028, and AWS Trainium 4 use of 12m in 2028. Lumentum and Coherent gain CW laser upside, Browave shuffle boxes, Semtech and Marvell TIAs and drivers, and Tower NPO PIC exposure. x.com x.comÂ
Coherent's booked InP laser capacity gives it a potential path into Nvidia's CPO expansion. Nvidia wants optical-engine capacity up 15x by mid-2027 and holds laser purchase commitments and capacity rights from its $2B Coherent investment. Coherent says fiscal 2027 is essentially booked and customers are reserving into 2028, but most near-term orders are for pluggables and other products; scale-up CPO revenue starts only in H2 2027. Neither company has sized Nvidia's rights. x.comÂ
Lumentum stands to gain as the shift from copper to light inside AI data centers accelerates. Co-packaged optics is now in mass production, per TrendForce, with Nvidia shipping Spectrum-X CPO switches. Near-packaged optics is catching on fast; Lumentum CEO Michael Hurlston says its demand looks bigger than CPO's and came sooner, now late 2027 or early 2028. He sees about $40 a share of fiscal 2028 earnings power, above Street estimates, with none of CPO or NPO in the numbers yet. x.comÂ
Scale-up moving to optics adds demand for optical suppliers even if new AI architectures need fewer switches. Bigger data centers and more GPUs add to that need; Jensen Huang expects future optics requirements to be several orders of magnitude above what NVIDIA ships today. This challenges the optics bear case for Lumentum, Coherent, Tower Semiconductor and Credo. x.comÂ
Pluggable optics have a new scaling path alongside CPO and NPO, supporting demand for light from Lumentum, Coherent and Applied Optoelectronics. Nvidia and Cisco's planned USFP packs 16 full-duplex 400G/lane connections into an OSFP-sized footprint, targeting four times the bandwidth density of 200G/lane modules while retaining replaceability. Volume-production timing and adoption remain unknown. x.com x.comÂ
Copper scale-up is dead, making optics hyper bullish, especially Lumentum. Nvidia's Rubin NVLink Nyquist cut from 56 to 47 GHz signals failure: reflections matter, and bidirectional links make them worse. Feynman will have to use 16-wavelength DWDM ring-modulator CPO at roughly 50-64G NRZ. x.com x.comÂ
Optical test makers such as FormFactor, Aehr Test Systems and Viavi should keep growing whichever optical path wins, because every interconnect, pluggable, near-packaged or co-packaged, must be tested. Optical stocks plunged after a June report of CPO shipment delays, and engineers now point to a growing role for near-packaged optics and possible delays in some scale-up CPO. That shifts the question to who benefits as both grow, and testing is the bottleneck behind every other AI bottleneck. … Show more
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
Coherent now has credible exposure to almost every optical architecture hyperscalers are exploring, and its Nvidia deal materially de-risks that roadmap. Nvidia's nonexclusive pact adds a multibillion-dollar purchase commitment, a $2B equity investment and access to five CPO product families. First CPO/NPO revenue targeted for H2 2026 matches Nvidia's timing. Data center and communications are already 72% of revenue. Qualification, standards, concentration and margins remain unsettled. x.comÂ
Near-packaged optics, the segment Chinese suppliers Innolight, Eoptolink and Accelink serve, is gaining commercial traction faster than consensus expects and could compress co-packaged optics' market. NPO already shows 6.4T bandwidth at the switch while CPO is still validating 1.6T, with better ROI, serviceability and vendor flexibility. Google is testing 6.4T for mid-2027 alongside its NPO-only TPUv9, and Meta and Amazon add demand. Goldman's $91 billion CPO forecast assumes no displacement. … Show more
Optical networking's broader rollout will be slow because scale-up and scale-out require orders of magnitude more connections than today's limited optical distance links. Supply-chain discussions echo that slow pace. NPO/CPO starts in switches and reaches XPUs and GPUs much later, with new challenges. Optical backplanes will be necessary as racks move to optical, though copper will remain in many implementations. x.com x.com x.com x.comÂ
