Investment Rating - The report raises price targets for COHR and LITE by 16% and 15% respectively, both reaching $100, indicating a positive investment outlook for these companies [7][9]. Core Insights - The adoption of co-packaged optics (CPO) is expected to be more imminent than previously anticipated, driven by a broad group of suppliers, while the disruption to existing optical companies will be limited [6][9]. - CPO advantages, such as performance and power consumption, are now outweighing challenges related to thermal management, reliability, and serviceability [9]. - The CPO market is projected to reach $5 billion by 2030, with significant growth expected starting in 2027 [9]. - The total addressable market (TAM) for pluggable transceivers is expected to expand from $11 billion in 2025 to $23 billion in 2030, reflecting a compound annual growth rate (CAGR) of 17% [9]. Summary by Sections CPO Deep-Dive - The CPO market is gaining traction due to the increasing demand for high data rates and power efficiency, particularly in the context of AI advancements [6][9]. - The report emphasizes that existing optical suppliers will continue to play a crucial role in the CPO ecosystem, alleviating investor concerns about potential disruptions [9]. Optical Networking - The report highlights a positive trajectory for optical networking companies, with raised estimates and price targets for COHR and LITE, supported by stronger demand drivers [7][9]. - Recent positive data points from telecom demand and pre-announcements from Lumentum have contributed to the increased confidence in these companies' positioning within the CPO landscape [9]. NVIDIA Insights - NVIDIA's GTC Paris keynote underscored the strong potential for AI infrastructure deployment in Europe, with an expected $1.5 trillion investment in AI infrastructure over the coming years [12]. - The report notes that NVIDIA is ramping up production of its AI data center products, with significant demand visibility extending into 2026 [12].