Lumentum Poised to Outgrow Nvidia as AI Market Sees Exponential Growth

The AI revolution has brought massive growth to Nvidia and other hardware stocks related to artificial intelligence. However, one key technology transition is poised to outgrow everyone in the space over the next few years: connectivity technology using optical fiber connections.

Lumentum, a specialist and leader in optical technology, is at the center of this transition. According to Lumentum's Vice President of Investor Relations, Kathy Ta, 'If we think of the Data Center Interconnect or the telecom market being sort of a 1x multiple, what we are seeing now for scale-across is probably 10x of what we saw for DCI.' She predicts that optical connections will soon displace traditional copper-based connections in data centers.

This growth opportunity is significant. 'What we are seeing now for scale-out is probably 10x of what we are seeing for DCI,' Ta continued. 'When all of the scale-up goes optical, it is probably a full 10x above the 10x scale-out.' This means that the market will multiply 30 times.

Nvidia has already invested $2 billion in Lumentum in March, and this investment is likely to pay off handsomely as optical connections replace copper over the next several years. The power of compounding will add a layer of growth on top of the already strong growth in AI.