Optical networking stocks extended their strong 2026 rally on Wednesday, with shares of Coherent and Lumentum Holdings climbing alongside broader enthusiasm around artificial intelligence infrastructure demand.
Coherent shares (COHR) rose 7.2%, while Lumentum gained 3.68%.
Applied Optoelectronics surged 10.39%, and Corning added 2.42% as investors continued piling into companies tied to AI data-center buildouts.
All four companies have gained at least 100% so far this year, highlighting investor appetite for businesses supplying optical and networking hardware critical to AI computing infrastructure.
Applied Optoelectronics has led the group with a 440% rally in 2026.
AI infrastructure demand lifts optical networking stocks
The sector’s latest gains did not appear to stem from a single catalyst.
Instead, investors continued to react positively to signs of strengthening demand across the AI data-center ecosystem.
Companies such as Coherent and Lumentum supply optical transceivers and photonic components used to move massive amounts of data between AI servers.
As hyperscale data-center operators expand infrastructure to support generative AI workloads, investors have increasingly focused on suppliers enabling faster data transmission.
Broader semiconductor and optical networking stocks also advanced on Wednesday after concerns emerged around tightening global memory chip supply.
Market sentiment improved further as Nvidia Chief Executive Jensen Huang joined President Donald Trump on his trip to China.
Supply concerns intensified after labor negotiations at Samsung Electronics reportedly collapsed, raising the possibility of additional disruption in the memory chip market.
Trump China visit adds to Coherent momentum
Investor sentiment toward Coherent also received a boost after CEO Jim Anderson joined Trump’s China delegation.
Trump said in a social media post that he would ask China’s Xi Jinping to “‘open up’ China so that these brilliant people can work their magic.”
Separately, Needham highlighted positive commentary from Coherent Chief Marketing Officer Sanjai Parthasarathi following an investor dinner on Tuesday.
According to the research note, the company shipped its first transceiver from its 6-inch fabrication facility, a move expected to improve gross margins compared with earlier-generation products.
The development reinforced optimism that Coherent could strengthen its position in the fast-growing high-speed transceiver market.
BofA raises Coherent price target
BofA Securities raised its price target on the stock to $400 from $365 while maintaining a Neutral rating.
Given 20-30% share in the global transceiver market, we think COHR is best positioned to benefit from higher volumes in 800G/1.6T transceivers, as we contemplate in our new optical model. We raise our PO to $400 from $365, now on 41x CY27 PE on higher estimates vs. 40x prior, higher due to the stronger potential for earnings leverage and share gains as the market increasingly shifts to higher-speed transceivers.
Arya also noted that Coherent could gain additional market share because of its supply advantage in 6-inch substrates, enabling the company to fulfill demand across multiple platforms, including SiPho and EML.
BofA additionally forecast that the total addressable AI data-center market could reach $1.7 trillion by 2030, up from a prior estimate of $1.4 trillion.
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