Roundhill Launches Photonics ETF Amid AI-Driven Growth

Roundhill Investments is launching its second ETF focused on artificial intelligence (AI) this week. The new fund, Roundhill Photonics and Optics ETF (LYTE), targets the photonics industry, which has seen significant growth due to AI data center developers' desire for optical networking.

Optical networking uses light pulses in fiber-optic systems instead of conventional electrical signals to transmit data between processors. This technology promises to be faster, more energy efficient, and capable of transmitting data over longer distances than traditional copper wire connections.

Nvidia has committed at least $6.5 billion to companies developing photonics technology since March, including stakes in Coherent and Lumentum. The company's Feynman, a major GPU microarchitecture pivot away from copper and to photonics, is currently slated for a 2028 release and designed to improve interconnectivity and networking capabilities within data centers.

The total addressable market opportunity for optical networking is projected by Goldman Sachs to grow more than nine times over through 2028, from an estimated $15 billion to an estimated $154 billion. Roundhill's new ETF will compete with Tema ETFs' LAZR Photonics & Optics ETF, which launched on June 30.