PhotonBull
Equity Researcher, Co-Runner of Retail Club
Applied Optoelectronics is the best dip to buy after the photonics selloff took it from the mid-$200s to around $140. The market is misreading Meta's plan to sell compute as bearish for AI names. Memory names like Micron and SanDisk are near highs, where bad sentiment could hit harder, and Nebius takes the most direct hit from fears Meta becomes a competitor or cancels deals. All of these should bounce soon. x.com x.comÂ
Applied Optoelectronics is a strong way to own the laser bottleneck in the AI buildout, and its pullback stems from temporary pressures. Its in-house InP laser fab matters because lasers, not modules, are optics' real constraint. Shares are about 27% off the May high, weighed by a $600m ATM that should finish within a month, small insider sales and CPO delay rumors. The CPO delay is quietly bullish, as Nvidia reaffirmed pluggables through 2027. It booked a 1.6T order above $200m. x.comÂ
The AI stack's prolonged selloff may have already de-risked it ahead of Anthropic's IPO. The mid-November IPO could mark a bottom rather than trigger another sectorwide selloff like earlier mega-IPOs. Nebius, IREN and Cipher Mining do not look likely to fall much further; the same goes for Applied Optoelectronics and AXT. From June highs, Cipher is down about 73%, IREN 62%, Nebius 45% and WhiteFiber 78%. x.com 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 look like a crowded rotation rather than a better bet than memory. Photonics has a smaller addressable market than memory and moves with it anyway. Buyers are driven by recency bias after Applied Optoelectronics' 90% recovery, traders liquidated in memory seeking higher-risk bets, and smaller companies with higher multiples. @therogueoracle adds that these stocks had massive runs and have not pulled back nearly enough, so they are more likely to chop sideways and down. x.com … Show more
Optics could be one of the biggest AI trades of 2027, the next layer of the buildout after memory led 2026. As AI clusters scale and networking moves from 800G to 1.6T and beyond, demand for optical infrastructure should accelerate. Applied Optoelectronics' earnings will set the tone. The watchlist spans optical modules, silicon photonics, AI networking, connectivity and AI fabric, from Lumentum, Coherent and Fabrinet to Marvell, Arista, Broadcom, Corning and Astera Labs. x.com x.comÂ
Applied Optoelectronics' risk-reward is quite favorable because even a fraction of management's revenue goal would make the stock worth more. Management says monthly revenue in 2027 will match annual revenue in 2025; meeting that goal would put shares above $200. AAOI is a high-risk speculative stock, not a core holding or in Broadcom's league. Management is serviceable, not elite; those without high risk tolerance should avoid it. x.comÂ
Optical component stocks such as Lumentum, Coherent, Applied Optoelectronics and AXT look early in an unwind, as a wave of new photonics paid newsletters signals a crowded narrative. Price pays; narratives do not. x.comÂ
Applied Optoelectronics should trade above $150, in part because Lumentum's CEO says its optical components are sold out through early 2029 and it cannot meet roughly 70% of demand for some products through 2027. That industry signal strengthens the case for AAOI's expanding 800G/1.6T offerings after completion of its $600M ATM, with shares around $110. x.comÂ
Lumentum, Coherent and Applied Optoelectronics remain buys amid AI optics demand: Lumentum's CEO said its AI optical parts are completely sold out through early 2029. x.comÂ
Applied Optoelectronics is lagging as the market becomes more discerning between low-quality companies and high-quality ones with durable growth. @GavinSBaker said weeks ago the AI bottleneck trade was over, and that has played out in optics: Lumentum keeps climbing while weaker names like Applied Optoelectronics lag. x.com x.comÂ
Rising AI equipment demand could sustain the buildout behind Micron, Nebius, Marvell, Bloom Energy and Applied Optoelectronics. ASML says customers are raising short- and medium-term forecasts, some are interested in orders for 2029 or 2030, and its currently planned 2027-28 supply may not fully meet demand. The dip in these AI stocks might be a buying opportunity. x.comÂ
