Shares of Coherent and other AI hardware makers made sizable gains this week.
Credit: Matthias Balk / Picture Alliance / Getty Images Key Takeaways
Shares of several photonics and optics firms seen as “pick and shovel” AI plays rose Friday.
Better-than-expected earnings from Applied Optoelectronics could be taken as a positive signal for other companies due to report next week.
Photonics and optics stocks got a big boost Friday in the wake of strong earnings and amid anticipation of a potential setback for overseas competition.
Shares of laser and optical transceiver maker Coherent (COHR) jumped 13%, while Lumentum (LITE) and fiber optic cable maker Corning (GLW) gained 6% and 5%, respectively, propelling them into the ranks of the big gainers on the S&P 500 Friday on a solid day for tech stocks. Applied Optoelectronics (AAOI) shares rose 9%, after the company posted better-than-expected sales and profits.
The strong results from Applied Optoelectronics could be taken as a bullish signal for earnings from Nvidia-backed (NVDA) Lumentum and Coherent, which are scheduled to report next week. Analysts are projecting growing sales and profits for both companies on booming AI demand.
Friday’s rally adds to what’s already been a strong week for the stocks, after Reuters reported Tuesday that the Federal Communications Commission is drafting a rule that could ban imports of new optical transceivers made in China from being sold and installed in data centers in the U.S. The transceivers help transmit data through fiber optic cables in data centers, an industry that Coherent, Applied Optoelectronics, Lumentum, and Corning all play a key role in.
Reuters said the ban, which could go into effect by the end of the year, is intended to prevent data theft, malware, or service disruptions at U.S. data centers. The FCC did not respond to an Investopedia request for comment in time for publication.
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