After storage, look at optical communications: Three of the top ten S&P 500 stocks this year are from optical modules!

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After storage chips, optical communication technology is becoming the next emerging frontier for AI investment on Wall Street. Among the top ten gainers in the S&P 500 index this year, three are from the optical communication sector, and related stocks have all more than doubled in value since the beginning of 2026.

Lumentum, Ciena, and Corning have all ranked among the top ten gainers in the S&P 500 this year, with their stock prices more than doubling. Corning's stock price surged recently after announcing a partnership with Nvidia; Coherent has also become one of the strongest performing stocks in the optical communication sector this year. On the storage chip side, memory stocks like SanDisk and Intel continue to lead the S&P 500 gainers list this year, but the optical communication sector is catching up fast.

As this track heats up, the market has seen new ETFs dedicated to tracking the photonics field—the Corgi Lithography & Semiconductor Photonics ETF launched by Cboe was officially listed on May 6, with the symbol EUV, and is regarded as the DRAM ETF counterpart for optical communications. The fund has been listed for over a week, maintaining positive returns, but its gains are not as eye-catching as those seen when the DRAM ETF launched.

The core logic behind this wave of optical communication stocks is: AI compute power expansion is entering a new stage; as the early shortage of GPUs gradually eases, storage and network communication are becoming the next bottlenecks restricting overall AI system performance, and optical communication technology is seen as the key solution to congestion issues between GPUs in data centers.

Why Optical Communication Has Become the New Bottleneck in AI Data Centers

Optical communication technology transmits signals by photons and data at the speed of light, serving as the foundational technology for current global internet infrastructure—it is not a new concept. However, AI data centers’ large-scale expansion is granting this mature technology brand new strategic value.

According to Business Insider, WyzeMind CEO Dinesh Tyagi—a chip and AI expert with decades of Silicon Valley experience who moved into investment after selling his tech company—pointed out that AI's growth is evolving from an early stage characterized by compute power shortages to a new phase mainly limited by storage and network communication. Against this backdrop, optical communication’s key value is in solving high-efficiency communication challenges between GPU server racks within data centers.

Dinesh Tyagi states that currently, GPUs within data centers mainly rely on traditional copper wire interconnections, which create what he describes as "traffic jams" in networking, limiting computing efficiency.

Compared to traditional copper wires, optical communication technology offers several advantages in AI computing scenarios: lower power consumption, less heat, reduced signal delay, and lower overall cost. These features are increasingly indispensable for the building and operation of hyperscale data centers.

Dinesh Tyagi says the industry expects major breakthroughs in optical communication technology within the next two to three years, potentially eliminating current communication bottlenecks altogether. This technological outlook is also an important narrative driving the rapid rise of relevant stocks.

From DRAM ETF to Photonics ETF: Investment Tools Accelerate Their Arrival

As optical communication stocks quickly gain prominence among investors, capital markets have launched supporting products. The Corgi Lithography & Semiconductor Photonics ETF by Cboe was officially listed on May 6, providing investors with a dedicated tool for the photonics track—its positioning is very similar to the much-discussed DRAM ETF in the previous storage chip surge.

In its product introduction, Cboe states: "Light is the core limiting factor in chip manufacturing, data transmission, and precision sensing, with only a handful of companies mastering the key technologies to control it."

This ETF has been listed for over a week, maintaining positive returns, but its overall performance is milder compared to the explosive surge of the DRAM ETF when it debuted.

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