Photonics is the hidden backbone of AI. As GPU clusters scale to hundreds of thousands, the bottleneck is no longer compute—it's data transfer between chips. Optical interconnects solve this, and demand is accelerating non-linearly. Goldman Sachs sees a total addressable market of over $154 billion by 2028.

Key companies to watch:

$Applied Optoelectronics(AAOI)$ : Vertically integrated with in-house lasers, benefiting from hyperscaler demand.

$Credo Technology Group Holding Ltd(CRDO)$ : High-margin growth, with optical revenue booming.

$Lumentum(LITE)$ : A blue-chip supplier of lasers and transceivers.

$COHERENT(COHR)$ : Diversified photonics player with exposure to datacom, telecom, and industrial lasers.

Compute isn't the limit—data movement is. The AI photonics buildout is still early, and demand keeps growing faster than supply.