Deutsche Bank Predicts Connectivity Boom in AI Infrastructure

Deutsche Bank analyst Gianmarco Conti has identified a significant shift in the AI infrastructure investment theme, from compute to connectivity. He believes that optical component and networking hardware makers will be the next wave of beneficiaries.

Conti initiated coverage on eight hardware stocks, naming Lumentum Holdings (LITE-US) and Coherent (COHR-US) as his highest-conviction top picks with Buy ratings on both. Both companies produce lasers and optical components essential to data centers, and are currently facing tight supply, sold-out products, and rising prices.

Nvidia has invested $2 billion in each company to support R&D and secure procurement of relevant hardware.