[music] We're back on Morning Trade Live. Let's focus on Broadcom. The stock [music] is ticking lower this morning after a Reuters report of a potential supply chain bottleneck.More on [music] that in a second with Marley. But the stock has remained relatively rangebound since gapping higher after earnings last September. Over the last 138 trading days, the stock is down 5%, but the last 12 months have still been strong.Broadcom is up more than 65% year-over-year. currently trading down 2% right now off the ...

Core Insights - The presentation is part of Coherent's 2026 OFC Technology Innovation Briefing, highlighting the company's focus on technology advancements in the data center communications sector [1] - The agenda includes discussions from key executives on various topics related to the company's operations and innovations, indicating a structured approach to sharing information with stakeholders [3] Company Overview - CEO Jim Anderson will provide an overview of the Data Center Communications segment, emphasizing the importance of this area for the company's growth strategy [3] - CTO Julie Eng will discuss the concepts of scale out and scale up, which are critical for understanding the company's operational efficiencies and technological advancements [3] - Dr. Beck Mason, EVP of Semiconductor Devices, will address the topics of lasers and indium phosphide capacity, which are essential components in the semiconductor industry [3] - Chief Marketing Officer Dr. Sanjai Parthasarathi will discuss scaling across, indicating a focus on expanding the company's market reach and operational capabilities [3]

Core Insights - Fabrinet (FN) is experiencing significant growth in its high-performance computing (HPC) business, with revenues reaching $86 million in Q2 FY26, a remarkable sequential increase of 473.3% from $15 million in the previous quarter [1][10] Group 1: HPC Business Growth - The HPC segment has substantially contributed to the non-optical communications segment, which generated $300 million in revenues, marking a 61% year-over-year increase and a 30% sequential increase [2] - Management anticipates continued growth in the HPC business as AI infrastructure spending rises, with expectations of generating over $150 million in revenues once the current HPC program is fully ramped [3][4] Group 2: Production and Capacity - Fabrinet is currently operating two fully automated production lines for its HPC program, with additional lines being qualified, and is slightly more than halfway through the ramp-up process [3] - The company expects to reach the projected revenue level of over $150 million in the coming quarters as production capacity increases [3] Group 3: Competitive Landscape - Fabrinet faces competition from Coherent Corporation and Lumentum Holdings in the HPC and advanced optical manufacturing sectors [5] - Coherent has launched the Thermadite 800 liquid cold plates for cooling AI accelerators and HPC systems, which offer superior thermal conductivity compared to conventional solutions [6] - Lumentum provides essential components for high-speed data movement in HPC and AI data centers, including lasers and optical modules [7] Group 4: Financial Performance and Valuation - Fabrinet's shares have increased by 36% over the past six months, outperforming the Zacks Electronics - Miscellaneous Components industry's growth of 4.9% [8] - The forward 12-month price-to-sales (P/S) multiple for Fabrinet is 3.57X, which is higher than the industry average of 2.26X, indicating that the shares may be overvalued [12] - The Zacks Consensus Estimate for Fabrinet's fiscal 2026 earnings is $13.58 per share, reflecting a year-over-year increase of 33.5% [15]

Core Insights - The inclusion of Lumentum (LITE), Coherent (COHR), and Vertiv (VRT) in the S&P 500 signifies a shift in the AI trade from speculative to a structural component of the U.S. economy [1][15] - This event is not routine; it represents a significant moment in the AI infrastructure boom, highlighting the importance of photonics and data center power infrastructure [1][15] Company Summaries Lumentum (LITE) - Lumentum specializes in lasers, transceivers, and optical components essential for data movement in AI data centers, described as the "plumbing" for hyperscale AI [5] - The company has seen a remarkable stock performance, with shares up 814% over the past year and 51.51% year-to-date, despite a recent 25% decline [6][7] - Q2 FY2026 revenue reached $665.5 million, a 65.5% year-over-year increase, with non-GAAP operating margins expanding to 25.2% [7] Coherent (COHR) - Coherent, a peer of Lumentum, produces silicon carbide materials and optical networking products that are critical for the AI economy [8] - The stock has increased by 262.67% over the past year and 27.80% year-to-date, despite a recent 15% pullback [9] - The Datacenter and Communications segment generated $1.208 billion in revenue last quarter, up 34% year-over-year, now representing 72% of total revenue [10] Vertiv (VRT) - Vertiv provides power management systems and cooling infrastructure necessary for data centers, playing a crucial role in the AI buildout [11] - The stock has risen 195.20% over the past year and 49.27% year-to-date, with a record backlog of $15.0 billion, up 109% year-over-year [12][13] - For full year 2026, Vertiv expects net sales between $13.25 billion and $13.75 billion, indicating significant growth potential [13] Market Impact - The S&P 500 inclusion is a structural buying event, with over $7 trillion in assets benchmarked to the index, necessitating purchases of LITE, COHR, and VRT by passive funds [3][4] - This rebalancing is one of the most AI-focused in history, indicating the deep integration of AI infrastructure into the U.S. economy [15]

Market Overview - Technology stocks and bonds are experiencing declines due to ongoing geopolitical tensions, particularly the war in Iran, which raises concerns about energy market disruptions and inflation [1][2][3] - Oil prices are surging, with Brent crude reaching $85 for the first time in a long while, marking the largest movement since 2022 [1][2][3] Investor Sentiment - Investors are showing caution towards technology stocks, influenced by rising political uncertainty and concerns over AI spending and its potential to disrupt pricing power and margins [5][6][7] - The NASDAQ and S&P 500 are both down nearly 2%, reflecting a risk-off mentality among investors [2][27] Defense and Cybersecurity Sector - The ongoing conflict in the Middle East is expected to increase demand for defense technologies, although supply chains for these technologies are currently hampered [33][45] - Companies in the defense sector, such as RTX, Lockheed, and Northrop, are anticipated to benefit from increased military spending as munitions are replenished [38][39] AI and Technology Companies - OpenAI is facing backlash over its Pentagon deal, with CEO Sam Altman admitting the rollout was mishandled, which has negatively impacted the sentiment around its products [21][24] - Despite the negative sentiment, some analysts remain positive on companies like Palantir, which is used in defense applications, with 20 out of 31 analysts recommending a buy [36][37] Semiconductor Industry - NVIDIA is facing challenges due to potential new restrictions on chip sales to China, which could impact its sales forecasts significantly [28][30] - The U.S. is reportedly imposing more restrictions on chip exports, complicating the situation for companies reliant on the Chinese market [29][30] Geopolitical Impact - The Strait of Hormuz, a critical shipping channel, is under threat, which could further exacerbate energy supply issues and inflationary pressures [34][35] - The geopolitical landscape is causing a broader market selloff, with many sectors feeling the impact of rising tensions [9][10]

Coherent, Lumentum Stocks Rise After Nvidia Invests $2 Billion in Each - Barron'sSkip to Main ContentThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.# Coherent Stock, Lumentum Soar on Nvidia Deals. Here's What to Know.By [Adam Clark]ShareResize---ReprintsIn this article[C ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Hardware & Networking** sector, specifically the **Optical** segment, highlighting companies such as **Coherent**, **Lumentum**, **Fabrinet**, **Ciena**, and **Corning** [1][4]. Core Insights and Arguments - **Capex Growth**: Total capital expenditures (capex) from the top 5 U.S. Cloud Service Providers (CSPs) are projected to increase from approximately **$450 billion in 2025** to **$850 billion in 2027**, indicating a **CAGR of +37%** [7]. - **Transceiver Attach Rate**: The transceiver attach rate per XPU is expected to rise significantly, from an initial expectation of **1-to-1** to **2-to-1 or higher** on larger clusters, potentially reaching **5-to-1** on even larger deployments [10]. - **Datacom Market Expansion**: The total datacom market is forecasted to grow at a **20%+ CAGR**, increasing from **$17 billion in 2025** to **$46 billion in 2030**. The **800G+ segment** is expected to grow even faster at **40%+ CAGR**, reaching **$44 billion** [15]. - **CPO Market Growth**: The CPO market is anticipated to expand from approximately **$500 million in 2027** to **$10 billion in 2030**, driven by scale-up use cases [18]. Company-Specific Insights Coherent - **Revenue Breakdown**: Datacom contributes about **55%** of revenue, while Telecom & DCI accounts for **20%**. The company is positioned to benefit from a shift to **6-inch InP wafers** and a doubling of InP capacity [29]. - **Investment Thesis**: Expected revenue CAGR of **20%+**, gross margin of **~42%**, and operating margin of **24%+** by CY27, with an EPS target of **$9-$10** [29]. Lumentum - **Revenue Breakdown**: Datacom represents **50%** of revenue, with Telecom & DCI at **45%**. The company is set to benefit from the ramp-up of **100G and 200G EMLs** [31]. - **Investment Thesis**: Projected revenue CAGR of **65%+**, gross margin of **45%+**, and operating margin of **35%+** by CY27, with an EPS target of **$20+** [31]. Fabrinet - **Revenue Breakdown**: Datacom accounts for **25%** of revenue, while Telecom & DCI makes up **50%**. The company has recently entered the **HPC market**, contributing **10%** of revenue [33]. - **Investment Thesis**: Expected revenue CAGR of **30%+**, gross margin of **12.5%+**, and operating margin of **11%+** by CY27, with an EPS target of **$20+** [33]. Ciena - **Market Position**: Ciena is a leader in optical systems for Telecom & DCI markets and plans to enter the datacom market [35]. - **Investment Thesis**: Anticipated revenue CAGR of **30%+**, gross margin of **44.5%**, and operating margin of **24%+** by CY27, with an EPS target of **~$12** [35]. Corning - **Revenue Breakdown**: Approximately **40%** of revenue comes from optical fiber and connectors. The company is well-positioned for revenue growth due to strong investments in data centers [37]. - **Investment Thesis**: Expected revenue CAGR in the mid- to high-teens, gross margin of **~40%**, and operating margin of **~24%** by CY27, with an EPS target of **-$5** [37]. Additional Important Insights - **Supplier Landscape**: The market has a vast list of suppliers, particularly from Asia, but few are vertically integrated across design and manufacturing [24]. - **Co-opetition Dynamics**: Companies like Coherent and Lumentum engage in co-opetition, supplying each other while also competing in various segments [27]. This summary encapsulates the key points from the conference call, providing insights into the industry dynamics, company-specific forecasts, and broader market trends.

Core Insights - Photonics technology utilizes light for various applications, including data transmission and medical uses, making it an attractive sector for investors seeking new tech opportunities [2] - The interaction between photonics and AI applications is crucial for tech investors, as photonics can provide the fast data transmission needed in the AI space [3] Company Summaries - Lumentum Holdings Inc. specializes in lasers and optical modules for telecommunications, reporting a 45% year-to-date increase in shares and a revenue growth of nearly two-thirds year-over-year to over $665 million for Q2 fiscal 2026 [4] - Lumentum's optical circuit switch business has a backlog of $400 million, and the company projects a revenue midpoint of $805 million for the current quarter, indicating an 85% year-over-year improvement [5] - Other photonics companies, such as Coherent and MKS Instruments, have also shown growth, with MKS offering a diversified approach in the photonics space [6]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: nLight (LASR) - nLight currently holds a Momentum Style Score of B, indicating a positive momentum characteristic [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - Over the past week, nLight shares have increased by 12.08%, while the Zacks Electronics - Semiconductors industry remained flat [5] - In the last month, nLight's stock price has risen by 31.32%, significantly outperforming the industry's 1.82% [5] - Over the past quarter, nLight shares have surged by 85.18%, and over the last year, they have skyrocketed by 394.03%, compared to the S&P 500's increases of 3.73% and 16.78%, respectively [6] Trading Volume - nLight's average 20-day trading volume is 1,267,875 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, one earnings estimate for nLight has increased, while none have decreased, raising the consensus estimate from $0.20 to $0.21 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions during the same period [9] Conclusion - Considering the positive momentum indicators and earnings outlook, nLight is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [10][11]

Core Insights - The artificial intelligence (AI) sector is poised for significant transformation driven by robust demand from various end markets, including hyperscale automation, robotics, healthcare, energy, materials, financials, and cybersecurity over the next five years [1] Company Summaries Applied Digital Corp. (APLD) - APLD is a U.S. designer and operator of high-performance data centers specifically for AI and blockchain workloads, with a Zacks Rank of 2 (Buy) [5][12] - The global AI market is projected to reach $500 billion by 2027, indicating strong long-term growth potential for APLD [5] - APLD's data centers are designed to meet the high power density and cooling requirements of AI applications, which positions the company favorably as demand from hyperscalers increases [6] - The company has secured multi-year leases at its Ellendale campus, expanding from 250 MW to 400 MW, with anticipated lease revenue of approximately $11 billion over 15 years [7] - APLD has reduced its build timelines from 24 months to 12-14 months and is currently developing multiple campuses with 700 MW under construction [9] - The company has an expected revenue growth rate of 30.4% and earnings growth rate of 61.3% for the current year, with significant upward revisions in earnings estimates over the past 60 days [12] Lumentum Holdings Inc. (LITE) - LITE specializes in optical and photonic technologies for telecommunications and data centers, holding a Zacks Rank of 1 (Strong Buy) [17] - The company is focused on developing photonic solutions for AI applications, particularly in data centers, with offerings that include high-speed transceivers and lasers [15] - LITE has seen a surge in demand due to its collaboration with NVIDIA Corp. in developing silicon photonics for networking switches [16] - The expected revenue growth rate for LITE is 56% and earnings growth rate is over 100% for the current year, with positive revisions in earnings estimates noted over the last 60 days [17]