Lumentum (LITE) should benefit as Nvidia (NVDA) “accelerates” its use of co-packaged optics, GF Securities said.
“At GTC 2025, Nvidia (NVDA Buy) launched its [co-packaged optics] switches, Quantum-X scheduled in 2H25 and Spectrum-X in 2H26,” GF analyst Jeff Pu wrote in a note to clients. “Nvidia’s first-generation of scale-out [co-packaged optics], Quantum-X, utilizes a pluggable architecture rather than fully integrated co-packaged optics. For 2026’s GTC, we believe that Nvidia may launch the new generation [co-packaged optics] switch. We expect this generation to feature 115.2T and TSMC (2330 TT Buy) does the CPO (co-package optics). We believe the supply chain will start ramping in 2Q26, followed by an acceleration in 2H26/2027. We revised up our estimate for Nvidia’s scale out CPO switch to 2k/20k/80k in 2025/2026/2027.”
Pu said Lumentum should benefit from the “demand upside” for continuous-wave lasers, while there is more of a “neutral” impact for Coherent (COHR).
“According to recent earnings calls, Lumentum highlighted that optical scale-up is a longer-term structural opportunity starting late CY27,” Pu added. “We believe that Nvidia will consider the introduction of CPO/NPO starting with Rubin Ultra in 2H27, while the rack-to-rack interconnects are likely to transition toward [co-packaged optics] or NPO-based optical interconnect. We believe [Taiwan Semiconductor’s] (TSM) [co-packaged optics] solution for scale-up has already been sampled. However, volume production readiness remains uncertain, suggesting that NPO vs. CPO debate will continue.”