AI’s Next Chapter: Optical Communications
For two years the AI trade meant one thing: GPUs and chips, with Nvidia at the center. Those names are now high and crowded, and the market has started hunting for the layer that comes next. Today that layer has a name, optical communications, the technology that moves AI’s data at the speed of light between all those chips.
The tell is where Nvidia is putting its own money. It is investing about $2 billion in Lumentum (LITE) and another $2 billion in Coherent (COHR), the two stocks Daniel Yue points to as the faces of this shift. A second clue sits in the ETF data: Micron, a red-hot chip name, ranks third inside the QQQ but only thirteenth by market value, a sign the popular fund is already crowding into the obvious winners while the early money looks one step further out.
There is a method here worth borrowing. Comparing the top twenty holdings of QQQ against the top twenty companies by market cap shows where attention runs ahead of size, and that gap is often where tomorrow’s leaders hide. It beats copying someone else’s trades.
One warning holds it all in check. The market has not had a real correction since October 2022, valuations are stretched, and a rate hike is widely expected. Even the optical story is a wait, not a chase, at these levels.
The focus of the market today: the AI trade is rotating from chips toward optical communications, but the setup rewards patience over the urge to chase.
Full report available via the download button below. Read previous US Stock Express editions here.
US Stock Express 20260707 LITE COHR future trend QQQ
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.