Shares of Coherent (COHR) and Lumentum (LITE) climbed sharply after new agreements with Nvidia signaled rising demand for high-speed optical components. The momentum reflects broader structural growth in data center infrastructure tied to AI and machine learning workloads.
- Coherent (COHR) and Lumentum (LITE) shares rose 12% and 14% in March 2026 following new Nvidia (NVDA) supply deals
- Optical interconnects now support data transfer rates exceeding 800 Gbps per lane, critical for AI workloads
- Optical components projected to account for over 50% of data center interconnect spending by 2028
- NVIDIA’s H100 and B100 GPU deployments are driving demand for silicon photonics and laser diodes
- AMD’s AI chip roadmap increasingly incorporates optical I/O, expanding the ecosystem
- Data center traffic growth is forecast at over 30% annually through 2027
Coherent and Lumentum shares rose more than 12% and 14% respectively in mid-March 2026, driven by revelations of new supply deals with Nvidia (NVDA). The agreements underscore a growing reliance on advanced optical interconnects to support the escalating bandwidth needs of next-generation AI accelerators. These components, essential for moving vast data volumes across servers and racks, are becoming central to data center design, particularly in hyperscale environments deploying NVIDIA's H100 and upcoming B100 GPUs. The surge follows a broader trend: data center traffic is projected to increase by over 30% annually through 2027, fueled by generative AI and large language models. Optical technologies now enable data transfer rates exceeding 800 gigabits per second per lane, a necessity for maintaining performance at scale. Coherent's silicon photonics platforms and Lumentum's high-power laser diodes are positioned at the core of this transition, with both firms reporting expanded production capacity and increased order backlogs. Market analysts note that optical component demand is now outpacing traditional semiconductor growth, with embedded optical modules expected to account for over 50% of total data center interconnect spending by 2028. This shift benefits not only COHR and LITE but also related players like AMD (AMD), whose AI chips increasingly require integrated optical I/O. Meanwhile, volatility indices like the VIX (^VIX) remained subdued, indicating stable investor sentiment toward tech infrastructure despite broader macroeconomic uncertainties. The rally highlights a structural shift in semiconductor spending: from compute-centric chips to enabling infrastructure. As AI deployment scales globally, demand for energy-efficient, high-bandwidth optical solutions is expected to drive sustained capital investment, redefining the data center supply chain and creating long-term tailwinds for specialized component suppliers.