Photon Capital
Photonics & Semiconductor Research
VIAVI is a picks-and-shovels winner as AI data-center optical testing becomes its main growth driver. Revenue rose 42.8% to $406.8M on data-center and aerospace and defense demand, non-GAAP EPS jumped 80% to $0.27 with a 21% operating margin, and its network and service enablement segment grew 54.4% as Spirent contributes. Next-quarter guidance calls for $427-437M of revenue. The photonics buildout needs high-volume test and measurement, and data-center capex is surging. x.com x.comÂ
VIAVI Solutions benefits from every fight in the interconnect layer, since copper versus optical and pluggable versus co-packaged all raise test intensity whoever wins. Its quarter beat cleanly: revenue rose 52.5% to $443.1 million, operating margin expanded 960bp to 24%, and Q1 EPS guidance of $0.40-0.42 crushed the $0.28 estimate. The test segment grew 69.2%. CEO Oleg Khaykin called CPO delay fears nonsense, saying yield issues mean more testing, with CPO revenue starting this quarter. x.com … Show more
Viavi's AI data-center testing business is running ahead of plan. Q4 revenue of $443.1M and a 24.0% operating margin topped the high end of guidance, data center more than doubled year over year excluding Spirent, and the Q1 guide of $450M-$460M and $0.40-$0.42 EPS beats a $432M and $0.28 street. The $500M quarter moved up to calendar 2027 from fiscal 2028. CEO Oleg Khaykin called CPO yield-delay worries nonsense, since yield problems mean more testing, with CPO revenue starting this quarter. … Show more
Viavi Solutions can reach $90-$100 by 2028 as earnings scale and it keeps its rerating as an AI hardware enabler. It once traded at 13-16x forward earnings as slow-growth telecom instrumentation, but now trades near 38x 2027 estimates. Consensus non-GAAP EPS rises from about $0.94 in FY2026 to $1.83 by FY2028, and a bull case with stronger Spirent synergies reaches $2.25-$2.50. As a premier testing bottleneck for 1.6T and 3.2T optical deployments, it can sustain a 38-40x multiple. x.comÂ
Viavi Solutions is a huge beneficiary of 1.6T tailwinds and appears to have shown 3.2T test gear at OFC 2026. x.comÂ
Viavi Solutions is one of the best ways to play co-packaged optics and photonics, and the dilution-driven dip is a good entry. Viavi is raising $500M to repay its $450M Term Loan B, about 2% dilution that cleans up the balance sheet, yet shares fell almost 6% after hours. At roughly 39x 2027 estimates it is cheap versus photonics and CPO peers, and fundamentally less risky. CPO is a 2028-and-beyond story, so this is a longer-term holding. x.com x.com x.com x.com x.comÂ
Viavi remains a bottleneck play worth holding after beating estimates and guiding above consensus. Per @MartyChargin, quarterly EPS of $0.27 beat by $0.04 and revenue rose 42.8% to $406.8M, while June-quarter guidance of $0.29-0.31 EPS and $427-437M revenue tops consensus. x.comÂ
InP substrate demand and pricing still support the AI optics supply chain. Yunnan Germanium reports higher InP volumes from AI data centers and optical communications, plus higher prices. Q3 revenue rose 134.6% year on year, near AXT's guided 136%, but also includes germanium. IQE's H1 photonics grew 45%, partly from US defense funding. AXT's $66m Q3 guide covers only licensed exports or sales needing no license; a miss would more likely reflect licensing. x.comÂ
Nvidia's Q1 FY27 results materially improve demand visibility across the optics, networking and photonics stack. Revenue hit $81.6B, up 85%, with networking at $14.8B, up 199%, and Nvidia named multi-year optics deals with Coherent, Corning and Lumentum plus a Marvell partnership on NVLink Fusion and silicon photonics. AI cloud, industrial and enterprise revenue grew 31% sequentially versus 12% for hyperscale, so the buildout is spreading. Vera Rubin ramps in Q3. x.comÂ
Optical transceiver demand exceeds supply, and 1.6T lifts revenue per module for suppliers able to qualify capacity. Applied Optoelectronics raised at least $1.62B through 2026 ATMs; its last reported monthly capacity was 200,000 modules versus a year-end target above 650,000. Credo expects over $600M in FY2027 revenue across optical DSPs, PICs and modules, not modules alone. Shipments, yields and margins must prove out. Lumentum and Coherent already price in much expected growth. x.comÂ
Fabrinet is the strategic bottleneck for 1.6T optical interconnects, as its proprietary 5-axis active alignment solves the sub-0.5-micron laser coupling these transceivers need. HPC revenue jumped to $86M in Q2 FY26 from $15M on 200G EML lasers for Nvidia networking. Its Thailand Building 10 expansion starts going live in July 2026, AWS and Google broaden the customer base, and it holds $961M cash with no net debt. At about 3.6x forward sales, it is not priced for hype. x.comÂ
