Optical Networking Stocks Extend Slide as AI Funding Fears Grow

what happened

Shares of optical-networking companies extended their decline in late-Monday overnight trading. Applied Optoelectronics (AAOI), Lumentum Holdings (LITE) and Coherent (COHR) each lost about 2.5% after falling 8%-10% in regular trading. Stocktwits reported that investor concerns over the durability of artificial-intelligence infrastructure spending weighed on semiconductor and related industries. Broadcom CEO Hock Tan said capital availability could become a more serious obstacle to AI expansion than chip shortages. Intel CEO Lip-Bu Tan pointed to higher borrowing costs and uncertainty over the returns on AI investments.

The remarks added to doubts about whether AI companies can maintain their large infrastructure commitments. Lumentum was the weakest performer in the Nasdaq-100 on Monday, while SanDisk dropped 6% amid a sell-off in chip shares. The retreat interrupted an otherwise strong run for the three optical-networking stocks. AAOI, LITE and COHR have been among the major beneficiaries of this year’s AI infrastructure boom, as hyperscalers spend heavily on data centers and high-speed connections for increasingly demanding AI workloads.

The companies make optical components and networking equipment used to move data rapidly. Lumentum CEO Michael Hurlston recently said its optical products were sold out through early 2029, illustrating the scale of demand. Nvidia put $2 billion into each of Lumentum and Coherent to back optical-technology development and manufacturing expansion. Retail users on Stocktwits nevertheless remained hopeful about a rebound: AAOI sentiment was “extremely bullish” and LITE sentiment was “bullish,” while COHR sentiment stayed “bearish.” One trader called AAOI cheap and cited intense demand, another described LITE as oversold and wrote “900 eow,” and a third said COHR holders would regret not following or buying the stock. At the latest close, AAOI was up 189% year to date, LITE had gained 170% and COHR was 56% higher.

why it matters

The episode highlights how financing conditions and questions about AI-project returns can affect optical-infrastructure suppliers even while demand for their products remains strong.

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