CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
MaxLinear's AI optics ramp is now confirmed in its results and guidance. Q2 revenue rose 55% to $168.8M, beating estimates, operating margin jumped to 22.3% from 7.2%, and infrastructure grew 145% on optical AI data-center adoption. Q3 guidance of $210-220M implies 27% sequential growth. Keystone is ramping for 800G optics at hyperscale data centers, with 1.6T next, and a $19.7M inventory build suggests orders are already visible. x.comÂ
MaxLinear is a long-term hold because its chips sit inside every optical module AI data centers need. It makes the DSP and amplifier in those modules, and demand scales with every GPU rack built. Infrastructure revenue rose 136% year over year to 46% of sales, total revenue 43%, and optical guidance was raised after one quarter. Its 1.6T chip is built at Samsung, avoiding sold-out TSMC, with $219M prepaid for wafers. July earnings should prove the ramp; growth justifies the valuation. x.com x.com x.comÂ
MaxLinear's optical data center business has hit an inflection point, and the stock could reach $70-80 this year. Q1 EPS of 22 cents beat the 18-cent consensus and revenue of $137.2M topped estimates, up 43% year over year as infrastructure grew over 130% to become its largest market. The CEO called Q1 the start of a multi-year growth phase, with a step-function revenue increase expected in Q2 from optical ramps at multiple hyperscale customers. x.com x.comÂ
MaxLinear has strong operating leverage as its 800G optical data center ramp runs far faster than expected. Q3 revenue is guided up about 27% sequentially with flat OpEx, lifting operating margin near 28% on the way to 30%+. Weak cash flow reflects prepaying for 5nm wafers to meet a six-month backlog. FY26 optical guidance rose to $210-230M entirely from 800G, and 1.6T Rushmore, retimers and storage accelerators ramp in 2027-2028 with massive upside. The sell-off looks way overdone. x.com x.comÂ
MaxLinear's post-earnings reaction looks like an overreaction to solid growth. Q2 revenue rose 55% to $168.8M, infrastructure grew 145%, and adjusted operating margin expanded to 22.3% from 15.9%. Q3 guidance of $210-220M implies another ~27% sequential jump, 2026 optical data-center revenue guidance was raised again to $190-210M from $150-170M, and 1.6T products are in customer qualification. x.comÂ
Repeat orders and larger new-customer orders are driving SmartOptics' growth. Q3 revenue rose 80% and EBIT 340%, with strong cash flow. Ciena and Nokia are busy serving hyperscalers; SmartOptics should scoop up all other smaller customers. Its 300M revenue target by 2030 suggests more growth. x.comÂ
MaxLinear is being repriced as a scale-up play: it is one of only three companies, with Marvell and Broadcom, making DSPs for 1.6T optical interconnects, yet is worth about $2B against their $50B+. Its Keystone DSP ships to multiple hyperscalers at 400G and 800G, and its Annapurna platform adds 1.6T AEC and 3.2T retimers for scale-up. Infrastructure revenue grew 130%, revenue is projected at $630M by 2028 from about $200M, and Applied Optoelectronics' 800G and 1.6T ramp needs DSPs. x.comÂ
Applied Optoelectronics looks set for its next leg as AI data-center transceiver demand outstrips supply. Q2 EPS was $0.06 versus $0.02 expected and revenue rose 86.3% to $191.92M, a fifth straight record. Management guides to about $1.1B of 2026 revenue as a new Texas facility ramps capacity. The stock has formed a rounding bottom since September and is curling back through its 200 EMA; the trigger is $116.90. x.comÂ
Coherent's pivot to AI optics is paying off as copper gives way to optical links inside large AI clusters. Quarterly revenue topped $2 billion for the first time, up 42%, with datacenter and communications up 59% to 79% of sales. Multi-year contracts with AI leaders including Nvidia extend order visibility into 2028. It launched its PhotonLink interconnect platform at ECOC 2026, and its indium phosphide, VCSEL and 6-inch wafer strengths give it a moat in 800G and 1.6T transceivers. x.comÂ
Applied Optoelectronics guided Q3 revenue sharply higher to $255M-$290M with non-GAAP net income of $10.1M-$24.0M, showing growth turning into profit. It is expanding its Pearland, Texas, campus for 800G and 1.6T modules, and management expects orders to outstrip capacity through mid-2027. Its US-based, diversified manufacturing positions it for shifts away from Chinese optical modules, and as 800G shipments more than doubled in Q2, non-GAAP gross margin reached 29.8%. 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
Credo solves AI clusters' biggest pain points, network reliability and power consumption, and is now adding a second growth curve in optics. Its active electrical cables deliver 1,000x the link reliability of optical transceivers at lower power and cost, critical as clusters scale to millions of GPUs. With DustPhotonics closed, management expects ZeroFlap optics, silicon photonics chips and optical DSPs each to exceed $100 million in FY2027 revenue, taking optics past $600 million. x.comÂ
