AI optical communications is facing a new test. Lumentum(LITE 0.00%↑) and Coherent(COHR 0.00%↑) shares have recently pulled back, prompting the market to reassess demand for high-speed optical modules, AI data center capital spending, and industry valuations.
Yet the latest earnings show that both companies are still growing strongly. Lumentum posted revenue of $1.01 billion in the fourth quarter of fiscal 2026 and guided next-quarter revenue to $1.225–1.275 billion. Coherent reported fiscal 2026 revenue of $7.12 billion, with its data center and communications business reaching $5.27 billion. Demand is still expanding, but the capital market has begun to focus more on the quality of that growth.
A clear industry thread runs behind this: as AI clusters keep growing, network bandwidth, transmission power consumption, and system coordination are becoming important constraints on computing infrastructure.
The upgrade from 800G to 1.6T, together with the rapid development of silicon photonics and CPO, is opening up new room for the optical communications industry. However, a rising industry cycle does not mean every company will earn the same returns.
