Applied Optoelectronics, Lumentum, and Coherent rally sharply (13-24%), driven by AI datacenter interconnect demand.
The optical-networking complex surged on Monday with all three marquee names posting double-digit gains. Applied Optoelectronics (NASDAQ:AAOI) led the basket, up 24% to $184.51, while Lumentum (NASDAQ:LITE) traded 17% higher near $1,057, and Coherent (NYSE:COHR) rounded out the trio, up 13% to roughly $377.60. The rally mirrored last Thursday's sector-wide pullback, when all three shares fell sharply in unison. Today's bid reflects renewed enthusiasm for AI data center capex and the optical connectivity layer that links hyperscale GPU clusters. Year to date, Applied Optoelectronics stock is up 420%, Lumentum shares are up 184%, and Coherent has gained 104%; over the trailing year, those moves stretch to 1,136%, 1,516%, and 435%, respectively.
Applied Optoelectronics posted Q1 FY26 revenue of $151.14 million, growing 51% year over year on surging demand for 800G transceivers used in AI workloads, with the data center segment more than doubling to $81.4 million and the company achieving its first volume shipment of 800G product to a large hyperscale customer. Management guided Q2 revenue to $180 million to $198 million and signaled significantly larger sequential growth starting in Q3 as expanded Houston capacity comes online. CEO Thompson Lin pointed to "strong customer engagement around our 800G transceivers and 1.6 Tb products" as AI-driven data center investments accelerate. The stock advanced from Friday's close of $148.94.
Lumentum's fiscal Q2 2026 revenue of $665.5 million grew 66% year over year, with non-GAAP EPS of $1.67 topping the $1.41 consensus, and fiscal Q3 FY2026 guidance called for revenue of $780 million to $830 million, implying growth above 85% year over year. The company climbed from Friday's close near $904, extending one of the most extreme rallies in the entire optical components space. Retail sentiment leans into the same narrative, with one widely read r/StockMarket post arguing that "Lumentum and Coherent are the only real ways to play that shift" as GPU clusters scale, drawing 81 comments and a Reddit sentiment score of 82 classified as very bullish.
Coherent reported its fiscal Q3 FY2026 results with revenue of $1.806 billion growing 21% year over year and non-GAAP EPS of $1.41 marking its fourth consecutive earnings beat. The Datacenter and Communications segment reached $1.36 billion, or 75% of revenue, growing 41%, while the company's expanding partnership with NVIDIA, including a $2 billion investment from the chipmaker, anchors a roadmap that includes doubling internal indium phosphide output by year-end. Coherent recently joined the S&P 500, and CEO Jim Anderson cited "exceptionally strong demand across our datacenter and communications businesses," with Q4 FY2026 guidance of $1.91 billion to $2.05 billion keeping the AI demand thesis on track.
Bearish chatter flags that Coherent, Lumentum, and Ciena (NYSE:CIEN) shares are up 200-400% in 12 months with gross margins that don't justify the multiples, and customer concentration with a handful of hyperscalers means any pause in AI capex could ripple through all three simultaneously. The optics complex has shown it can swing by double digits within just a few sessions, with last Thursday's coordinated selloff and Monday's coordinated rip as bookends. Key catalysts include AAOI's Q3 capacity ramp, Lumentum's next quarterly update, and Coherent's co-packaged optics and optical circuit switch revenue contribution through 2027.