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 

Sivers is less exposed to tighter AI financing because its 700M SEK raise funds a buildout largely reliant on external foundries. It is qualifying with Ayar, Jabil, GlobalFoundries and O-Net for potential tier-one hyperscaler pluggable, CPO and NPO deployments. Higher rates may strain neoclouds needing billions for GPUs, but optical content and aggregate demand should still rise even if hyperscaler AI capex falls, especially as new players start qualification. x.com 

ASML and Lumentum are the better way to play the EUV lithography bottleneck, as better ETFs than the new EUV ETF are likely to launch soon, even though that ETF can reach $100. ASML had to develop a way to generate extreme ultraviolet light, which does not occur naturally on Earth's surface, to make more intricate next-generation chips. Ten stocks benefit from this bottleneck, including TSMC, ASML, Lam Research, Corning and Lumentum. x.com  x.com 

ASML cannot make enough EUV machines to meet demand, which it says will outrun supply through 2028. Its 2026 sales guide rose from €34-39 billion to €44-45 billion, and gross margin hit 57.5%. The combination of an EUV monopoly, demand outrunning supply and growing pricing power is rare. x.com 

ASML's EUV R&D is starting to pay off through operating leverage. Q3 R&D fell as a share of sales, though one quarter is not a trend. Higher units, IBM sales and EUV/DUV prices put 2028 estimates well above the 2030 guide and ahead of consensus; shares look cheap at €1,530. Assuming 30% prepayment, liabilities imply €42-45bn of orders in 2026's first nine months, subject to invoicing lags. The proposed MATCH Act could restrict China sales; 2029-30 demand is less certain than 2028. x.com  x.com  … Show more

Veeco is a top beneficiary of AI data centers' shift to photonics, as its tools make the indium phosphide lasers inside 800G and 1.6T transceivers and equipment orders lead the chip cycle. It disclosed over $250M of orders for its IBD, MOCVD and WaferEtch systems, shipping from late 2026 and ramping through 2027. Its laser annealing is critical to yields for 3nm and 2nm logic and HBM at makers like TSMC and Micron, and its pending Axcelis merger should add synergies. x.com 

Intel getting High-NA EUV working secures ASML's technological moat for the next decade, mattering more than the raised guidance that moved the stock. ASML confirmed High-NA has entered commercial production with lead customer Intel, removing the biggest technical overhang on whether its $350M+ machines work in high-volume manufacturing. Q2 net sales of €9.3 billion and EPS of €7.59 beat estimates with a 54% gross margin, and FY2026 revenue guidance rose to €43-45 billion from €34-39 billion. … Show more

Lumentum's AI demand is no longer a future story; it is already showing up in the numbers. Cloud and AI revenue more than doubled year over year, with components up 103% and systems up 123%. 200G EML shipments hit a record above 25% of EML revenue, CPO laser shipments are growing toward meaningful revenue by year-end, pump lasers rose 80% under long-term supply deals, initial 1.6T transceivers shipped, and the OCS ramp is on track under a multi-year, multibillion-dollar agreement. 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 

The Tuttle Capital Pure Play Photonics ETF is the purest high-beta basket on the optical interconnect and photonics supply chain in US markets. It holds companies earning at least half their revenue or operating profit from photonics, spanning AI data-center optical modules, coherent optical communications, lasers, optical manufacturing and test and measurement, which is why diversified names like Nokia and Marvell are excluded. It is tiny, with about $500,000 in assets after three trading days. … Show more