Morgan Stanley Bullish on AI Optical Communications, Favors Lumentum and Coherent
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Morgan Stanley reaffirmed after the OCP Summit that AI compute expansion is driving an optical-networking upgrade, naming Lumentum and Coherent as top picks after the recent sell-off — optical links are moving from the data-center perimeter into the AI chip cluster itself.
What is the real bottleneck for AI data centers?
Hyperscaler demand for compute remains strong, but expansion faces three constraints: power supply, network connectivity, and infrastructure efficiency.
This means → the industry focus is shifting from "just add bandwidth" to solving compute utilization, network stability, and operating efficiency all at once.
Morgan Stanley's view draws on the 2026 OCP Global Summit (Oct 12–15, San Jose), which drew roughly 15,000 attendees and turned away about 3,000 more due to venue capacity.
Ethernet is pushing into AI clusters — who benefits?
As AI clusters scale up, Ethernet is extending from traditional data-center networking into Scale-up networks — the high-speed links that tie multiple GPUs together inside a cluster.
In plain terms = Ethernet used to handle "building-to-building" traffic; now it is entering "chip-to-chip" territory inside the rack.
Morgan Stanley sees the addressable market for Arista (ANET) and Cisco (CSCO) expanding as Scale-up Ethernet switches begin shipping.
The bank cautions, however, that Ethernet's advance does not necessarily erode Nvidia's (NVDA) competitiveness — Nvidia supports multiple network operating systems and continues to broaden its ecosystem.
Why is optical communications the next critical battleground?
Traditional electrical interconnects are hitting limits in reach, power consumption, and bandwidth density; optical interconnects — using light instead of electrical signals — are moving deeper into AI systems.
Two key technology paths: NPO — near-package optics, placing optical components close to the chip package — and CPO — co-packaged optics, embedding them directly inside the package.
This means → whoever masters volume production of NPO/CPO captures a higher-value position in next-generation AI networks.
Morgan Stanley projects that by 2031, CPO and NPO will be the dominant forms in the 3.2 Tbps high-speed port market at 400 Gbps per lane.
Why Lumentum and Coherent specifically?
Morgan Stanley favors Lumentum (LITE) and Coherent (COHR) as top picks following the recent sector sell-off.
The bank sees NPO commercialization progress as a new catalyst for both companies.
It also stresses that the OCP Summit did not materially change its prior investment thesis, and that a larger overall optical market does not guarantee proportional revenue gains for every supplier.
In plain terms = the pie is getting bigger, but how it gets sliced is still undecided — winning specific customer deployments is what matters.
Is CPO reliable? What does Meta's data show?
Meta disclosed test results showing its more mature lab CPO systems reduced service interruptions by roughly 6× compared with traditional pluggable transceivers.
Over a cumulative 1.35 million system-hours of testing, no failures occurred that could not be resolved through maintenance.
This means → CPO is crossing the reliability threshold needed for large-scale deployment, though each vendor still needs to complete its own qualification.
What about laser supply and cross-data-center interconnect?
Optical solutions based on EML — electroabsorption modulated lasers — face supply-chain tightness: 200G EML supply is already constrained, and the shift to 400G could make sourcing harder.
Lumentum says its external-laser ELSFP module is in production, but where the laser sits — on the faceplate or integrated inside the system — remains an open industry debate.
Growing demand for cross-data-center coordinated computing (Scale-across) leads Morgan Stanley to flag long-haul optical equipment maker Ciena (CIEN) and test-equipment firm Keysight (KEYS) as additional beneficiaries.
This reflects a broader reality: AI optical communications is not a winner-take-all market — long-term competitiveness hinges on maintaining a high share of product value within each specific architecture.
市场有风险，内容仅供研究参考，不构成投资建议。