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AI Value-Chain & Enterprise Technology Research
MACOM is a concentrated photonics pick for terrestrial high-speed optics plus emerging space optical links. Capital was moved into MACOM and Tower Semiconductor after a full exit from Lumentum, as part of rotating toward less obvious, higher-conviction AI bottlenecks while long-term conviction in the AI buildout stays unchanged. x.com
Space-based AI data centers powered by space solar are becoming SpaceX's next growth engine, building an orbital compute market. In orbit, panels deliver about 5x the output of terrestrial ones, with no day-night cycle or atmospheric loss, and need no storage, making space solar about 10x more effective per watt. Starship's 200+ tons to orbit, targeting under $100/kg, makes launching that infrastructure viable, and the resulting AI revenue funds further cost cuts in a self-reinforcing loop. x.com
MACOM's product catalogue covers much of the optics area that could benefit from an AI-driven shift in network bottlenecks. Siliconcodesign expects coherent and coherent-lite optics to play a bigger role as AI usage shifts the bottleneck from scale-up bandwidth to data-center networks and internet traffic. This is quite bullish for MACOM longer term. x.com
MACOM's analog chips sit inside every 800G and 1.6T optical module Nvidia's Rubin needs, so modules cannot ship without it. MACOM is the volume supplier of drivers, TIAs and lasers. Lumentum ships the 200G-per-lane lasers, but MACOM owns share in the driver and TIA beside them, so a Rubin Ultra ramp in H2 2026 scales its optical line without new design wins. At 26x EV/sales and 156x earnings it looks rich, but it alone ships optical, RF and defense analog in volume. x.com x.com x.com
MACOM is a hold amid the AI sector sell-off: its investment in IQE de-risks operations a lot, but Coherent and Lumentum are better ways to play the 800G and 1.6T transition. x.com
MACOM is a key optical component supplier for Google's TPUs at a time when Google wants as many TPUs as it can get. The whole supply chain keeps beating quarter after quarter, underpromising and overdelivering on capacity increases, while MACOM is under the radar, underowned and still guiding very conservatively. A high P/E is justified if the market is underestimating future growth, and the stock is setting up to smash; pullbacks are buying opportunities. x.com x.com x.com
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.com
MACOM is priced for perfection after going all-in on the second half. A $100M+ drop in cash went into a big inventory build of finished goods for 800G and 1.6T shipments, so if hyperscaler demand from Meta or Google softens even 5%, it could be left holding expensive specialized chips, and Q3 EPS guidance of $1.31-1.37 is wound tight. The quarter did show real execution: 800G LPO adoption has begun, data center guidance rose to about 40% growth, and its analog moat looks wider than feared. x.com
Rising 1.6T switching demand favors optical suppliers, though their execution risks vary. Bank of America says the market could grow ~101% annually through 2030. Marvell's leading DSPs and Lumentum's supply-short 200G EML lasers are lowest risk; Applied Optoelectronics' capacity expansion and Fabrinet's customer concentration make them medium risk. Aeluma remains pre-commercial, while Lightwave Logic's polymer modulators are a high-risk moonshot despite its TSM partnership. x.com
Lumentum is the only volume supplier of EML lasers for 1.6T optics, capacity is sold out, and indium phosphide fabs do not scale overnight. Qualcomm and Corning partnered with it on 1,060nm VCSEL chip-to-chip links targeting about 10 Tb/s. Revenue grew 109% and it trades at 30.6x forward earnings with $1.07B of net cash; a one-time $7.8B non-cash convert charge hid profitable operations. Risks are convert dilution and Coherent and Broadcom adding InP lasers before the shortage eases. x.com
Networking is the next AI hardware trade after memory, whose share of rack value rose from 15% to 35%. Optics is moving inside the server, as Nvidia's Feynman architecture builds in co-packaged optics and silicon photonics. Scale-across networking could grow 30% a year just linking existing data centers, as inference moves closer to users and training spreads across sites. Supply is tight: Lumentum's CEO said it can meet only 30% of expected 2027 demand and sees optics tighter than memory. x.com
Applied Optoelectronics is the US-built option in 800G datacenter transceivers, where there is almost no domestic supply. It is scaling its line in Sugar Land, Texas, while larger Innolight and Eoptolink build in Asia and Lumentum and Coherent are crowded large caps. It also makes its own lasers, which Goldman flags as the binding shortage through 2027. Revenue rose 86% last quarter, with net cash. Risks: a -12% operating margin, concentrated customers, and whether in-house lasers hold at 1.6T. … Show more
