Optical Boom: How AI is Driving a Multi-Billion Dollar Market
Nvidia has been at the forefront of artificial intelligence (AI), but as AI models grow in complexity, traditional copper wiring is hitting its physical limits. The need to move data quickly and efficiently between processors is surpassing what copper can deliver.
Silicon photonics is emerging as a dominant technology platform for next-generation interconnects because it offers improved bandwidth density and lower power consumption. Companies like Coherent (COHR) and Lumentum (LITE), which manufacture advanced optical components and photonic devices, have seen their shares surge due to investors recognizing their strategic importance to the AI supply chain.
The global optical transceiver market is projected to reach $112.3 billion by 2031, driven primarily by AI training and inference workloads. To capture this growth, investors are turning to thematic exchange-traded funds (ETFs) focused on the underlying infrastructure powering optical connectivity.