Lumentum’s latest quarter has become a key read-through for the optical communications supply chain, according to a Nomura global AI trend tracking report dated Aug. 12. The company posted June-quarter revenue of $1.01 billion, up 109% year over year, while component revenue in 4QFY26 rose 103% to $649 million. Nomura said those results, along with management guidance, show that shortages in electro-absorption modulated lasers (EML) and continuous-wave (CW) lasers are unlikely to ease through FY26 and FY27. The report highlighted several data points behind that view: narrow-linewidth laser component shipments climbed more than 130%, pump laser shipments rose 80%, and management expects pump laser volumes to grow another 4x over the next few quarters even as capacity remains largely sold out. EML also set another quarterly record, with 200G EML already accounting for more than 25% of total EML revenue and expected to exceed 50% by mid-2027. Nomura also pointed to OCS, or optical circuit switching, as a major growth driver. Lumentum said OCS shipments doubled from 3QFY26 to 4QFY26 and guided for triple-digit year-over-year OCS revenue growth in 1QFY27, while still targeting $400 million in OCS revenue in 2H26. In Nomura’s view, the tight upstream optical chip market is creating a structural share-gain opportunity for Chinese companies including Yuanjie Technology, Innolight, and Tianfu Communication.

Hong Kong-based Tianfeng Securities’ overseas technology research team says the latest round of quarterly results across the AI supply chain has strengthened the case for an AI bull market comeback. In its review, the firm argued that cloud growth has reaccelerated, demand for compute continues to run ahead of supply, and customers are no longer resisting higher prices. In some cases, they are paying upfront construction costs, which Tianfeng says is improving unit economics across AI infrastructure. The report points to record cloud contract activity over the past 20 quarters and says results from Google, Amazon Web Services and Microsoft Azure support the view that long-term cloud growth remains intact. It also highlights CoreWeave and Nebius as evidence that new compute providers have gained pricing power, with strong contract growth, prepaid terms and shorter payback periods. On the supply-chain side, Tianfeng says optical communications, memory and storage are showing signs that a bottom has formed, while debate over AI infrastructure returns has been weakened by fresh earnings data.

Hong Kong-based GF Securities said in its August technology sector report that the July pullback in AI-linked stocks is close to ending, with the Philadelphia Semiconductor Index seeing its forward P/E fall to 27x and crowded leveraged positions largely cleared out. The firm added AMD, Foxconn and Lumentum to its preferred list while removing United Microelectronics, MediaTek and ASML, arguing that current leadership is concentrated in GPU, CPU and optics rather than mature-node foundry, smartphone chips or front-end lithography. GF Securities also said supply-chain capital is rotating away from memory components toward optical interconnects, with near-packaged optics and co-packaged optics emerging as the next focus. It projected U.S. cloud service providers’ capital expenditure growth at 85% in 2026, 45% in 2027 and about 20% in 2028, while estimating debt issuance at $257 billion in 2026 and $419 billion in 2027. The report said net leverage should still stay around 0.5x by 2029. At the same time, it kept a cautious near-term view on smartphones and warned that NAND oversupply could begin to surface in the second half of 2027.

U.S. stocks closed lower for a second straight session as investors waited for July CPI data, with the Dow Jones Industrial Average down 0.34%, the S&P 500 off 0.32%, and the Nasdaq falling 0.6%. The market tone turned cautious as a standoff around the Strait of Hormuz kept oil elevated and Federal Reserve officials delivered fresh hawkish comments, leaving traders roughly split on whether the Fed could raise rates in September or stay on hold. At the same time, leadership inside technology stocks continued to fracture. Mega-cap names broadly weighed on indexes, while semiconductors, storage, optical networking, AI cloud infrastructure, and alternative asset managers outperformed. Strong earnings and guidance from CoreWeave, Lumentum, and Super Micro Computer fueled gains across AI infrastructure names, while Nvidia steadied after Jensen Huang addressed concerns tied to a newly announced $500 billion compute financing platform. The session also highlighted rising overlap between AI infrastructure and financial markets. CME plans to launch H100 and B200 GPU compute futures on Oct. 5, while lawmakers in Washington stepped up pressure on OpenAI, Anthropic, and Meta over AI development. Investors are now watching CPI, energy reports from EIA, OPEC, and IEA, earnings from Cisco, Coherent, and Cerebras, and Google’s upcoming product event for the next move across rates, oil, and AI-linked equities.

Lumentum reported quarterly results above market expectations, with revenue reaching $1.01 billion, up 109% year over year, and non-GAAP EPS at $3.23 versus the consensus estimate of $2.97. The company also said adjusted gross margin rose to 50.4%, hitting its operating target earlier than planned as demand for 1.6T optical transceivers and 200G electro-absorption modulated laser chips accelerated on AI infrastructure spending. A major focus for investors was co-packaged optics, or CPO. During its earnings call, management said volume demand for ultra-high-power laser chips from a lead customer, along with procurement and delivery of the first external light source modules, is scheduled for the second half of calendar year 2027. That statement pushed back on earlier market concerns that CPO deployment had slipped. Lumentum also described a sharp supply-demand imbalance in ultra-high-power continuous-wave lasers, saying constrained capacity has strengthened its pricing power. To support output, the company is seeking more indium phosphide substrate supply, including from partners such as AXTI. The update spilled into Taiwan’s supply chain, where ABMedia said optical and epitaxy-related stocks moved higher, with HwaCom hitting limit-up and LandMark and Phion rising close to 5%.

Taiwan Semiconductor Manufacturing Co. is accelerating work on its CoPoS and COUPE silicon photonics technologies, while AUO-linked companies Epistar, Tyntek and LandMark Optoelectronics are assembling around the co-packaged optics, or CPO, theme, according to ABMedia. The report says the group is positioning itself across light emission, sensing and packaging as suppliers look for an early foothold in next-generation advanced packaging led by TSMC. ABMedia describes CoPoS as a packaging approach that replaces the traditional silicon interposer with a very large glass substrate, expanding the area available for integrating multiple high-performance GPUs and ASICs into a single package. But the report also notes that higher chip density intensifies heat and power problems in ultra-high-compute environments, where conventional electrical transmission and copper interconnects are approaching physical limits. Against that backdrop, CPO is being framed as a route to move part of the interconnect from electrical to optical signaling by integrating optical transceivers directly into the package. Economic Daily News, cited in the report, says AUO is handling packaging integration and testing, while Epistar, Tyntek and LandMark each focus on different optical components. Market observers cited by ABMedia expect the group’s validation work to convert into orders and revenue as TSMC’s CoPoS ecosystem moves toward volume ramp-up.

WhiteLine Daily said the latest earnings round reinforced the same industry message: demand for optical interconnect products remains strong, with 800G already shipping at volume and 1.6T beginning to ramp. Applied Optoelectronics reported $108 million in second-quarter data center revenue, up 140% year over year, and said demand could stay above capacity through at least mid-2027. The company is expanding its U.S. manufacturing base and is targeting monthly capacity of more than 650,000 units by year-end, but near-term execution still depends on line ramp, yield, and delivery speed. MACOM offered a second signal from upstream, reporting $342.2 million in quarterly revenue, up 36% year over year, and a next-quarter revenue guide midpoint of about $420 million, above prior market expectations. Management also flagged shortages in InP DFB lasers, suggesting demand for pluggable optical modules is now pushing constraints back into the laser supply chain. WhiteLine Daily said the next phase for the sector will hinge less on proving demand and more on whether suppliers can turn expansion plans into shipments without losing yield, pricing discipline, or gross margin.

JPMorgan said in an Aug. 6 research note that the data communications market is set to grow at a 28% compound annual rate over the next five years, topping $70 billion by 2030. It said 1.6T products will be the biggest growth driver, while pluggable optics will lead through 2028 before NPO and CPO take over the incremental growth afterward. The report also pointed to Google and Meta as key buyers, and said Nvidia may regain share in the near term even as its long-term market share declines.