On August 5, the US AI computing sector continued its strong performance. As cloud giants such as Microsoft, Google, and Amazon delivered better-than-expected Q2 earnings, capital market enthusiasm for AI infrastructure investment heated up again. Notably, this round of capex is no longer focused solely on GPUs, but has shifted to the hidden yet critical optical module industry deep inside data centers. Shares of optical communication leaders such as Coherent and Lumentum hit record highs after earnings, signaling that the AI computing race has entered a new phase.
Cloud Giants' Capex Goes Wild, Compute Arms Race Escalates
According to US Stock SmartInvest, in Q2 2026, the combined capex of the four major cloud providers—Microsoft, Google, Amazon, and Meta—reached a record $61.8 billion, up 38% year-over-year and 12% quarter-over-quarter. Among them, Google Cloud capex rose 52% YoY to $17.8 billion; Microsoft's Intelligent Cloud segment capex was $16.5 billion, up 44% YoY; Amazon AWS capex was $15.2 billion, up 31% YoY. Although chip giant Nvidia's quarterly capex was smaller, its R&D spending and capacity expansion pace were equally impressive.
Where did the money go? The answer is clear: AI computing infrastructure. From Nvidia GPU clusters to self-developed ASIC chips, and then to supporting storage, networking, and cooling systems, almost every link is expanding capacity at a frantic pace. But the market has found that one segment's demand growth even exceeds GPU shipment growth itself—the optical modules connecting GPU clusters.
Why Is Optical Module Demand Exploding?
In large AI training clusters, thousands or even tens of thousands of GPUs require high-speed interconnection, and optical modules are the "blood vessels" of data transmission. In the past, a traditional server only needed 1-2 optical modules, but today a single NVL72 rack designed for AI needs hundreds of built-in 800G/1.6T optical modules—demand has increased a hundredfold.
More importantly, GPU generational upgrades are drastically shortening the optical module refresh cycle. From 400G in 2023 to 800G in 2025, and then to initial small-volume shipments of 1.6T in 2026, speeds nearly double every 18 months. Coherent revealed on its latest earnings call that its 1.6T optical modules passed certification tests at leading cloud providers in June and received massive orders, with the backlog now extending to Q2 2027.
Because optical modules and optical chips have high technical barriers and slow capacity expansion, the supply side cannot keep up with the explosive demand in the short term, leading to a "grab the goods" market situation. At the 2026 optical communications industry exhibition, multiple equipment vendors said spot prices for 1.6T optical modules had been bid up by more than 30%, with lead times extended to over 30 weeks—longer than Nvidia GPU delivery times.
Coherent Beats Earnings, Stock Soars 18% in a Day
As the largest optical module supplier in the US, Coherent (COHR) reported its fiscal Q4 2026 results on August 3. The report showed revenue of $1.68 billion, up 67% year-over-year, with data center optical module revenue accounting for more than 60% of total revenue for the first time. New orders in the quarter reached a record $2.8 billion, up 120% YoY and far above the market expectation of $1.9 billion. Stimulated by this, Coherent's stock surged 18.6% the day after the earnings release, pushing its market cap above $40 billion.
Another optical module giant, Lumentum (LITE), also performed well, with AI-related orders surging 250% YoY. It announced plans to invest in a new factory in Arizona to expand capacity. Lumentum's stock has risen more than 12% since August, driving the entire optical communications sector higher.
In the A-share market, optical module makers such as Zhongji Innolight and Eoptolink also hit consecutive daily limits on overseas order tailwinds, fully demonstrating that optical modules have become one of the most certain investment themes in the global AI computing supply chain.
Compute Bottleneck Shifts to Optical Interconnect: How to Grasp the Investment Logic?
In the past, investors focused on GPU performance and HBM bandwidth for computing power, but now optical modules are becoming the new bottleneck. The larger the AI cluster, the more network bandwidth needs to be upgraded, and the value of optical modules rises accordingly. Some industry analysts estimate that in future GB300 or Rubin architectures, the value ratio of GPU to optical modules will increase from 1:1 to 1:1.5.
For US stock investors, optical module opportunities mainly fall into three tracks:
- Optical module system integrators: Coherent and Lumentum are the absolute leaders in North America, directly benefiting from cloud provider orders with the greatest earnings elasticity.
- Optical chips and upstream components: Optical chips are the core of optical module cost. Benefiting from the 800G/1.6T upgrade, the demand for optical chips per module doubles. US listed manufacturers such as Fabrinet are also worth attention.
- High-speed interconnect new stars: Silicon photonics and CPO (co-packaged optics) are directions to reduce power consumption and increase density. Marvell, Broadcom, and others are actively positioning themselves. These companies combine both ASIC and optical interconnect concepts with large long-term growth potential.
Risk Warning: Large Short-Term Gains, Beware of Volatility
Despite the extremely high prosperity of optical modules, we need to remind investors that related stocks have risen sharply recently, with some targets' P/E ratios exceeding 60 times. The risk of staged valuation bubbles cannot be ignored. In addition, if cloud providers slow down capex in Q3, or 1.6T yield ramps miss expectations, sector volatility may rise significantly. We suggest investors adopt a staged position-building strategy and pay attention to monthly order data from Coherent, Lumentum, and other companies, as well as the latest network architecture guidance announced at Nvidia's GTC conference.
Overall, the AI computing arms race is shifting from "computing" to "transmission." As the core of high-speed interconnection, optical modules are becoming the winners of the new cycle.
