Optics Stocks Tumble as Tech Selloff Deepens Ahead of Earnings: Coherent Tumbles 12%, Applied Optoelectronics Drops 10%, Lumentum Falls 9%
The AI optics trade powered some of the market’s biggest gains this year, but a chipmaker-led selloff is now hitting Coherent, Lumentum, and Applied Optoelectronics all at once, right before each company steps up to report earnings.
Optical networking stocks that powered the AI data-center trade this year are falling fast, and the selling is landing on the group’s biggest names at once. Coherent (NYSE:COHR | COHR Price Prediction) stock is trading at $209.82, down 12% in afternoon trading, showing how quickly momentum in AI optics has reversed. Selling extends across the AI connectivity supply chain, from laser chips to finished transceiver modules.
Meanwhile, Applied Optoelectronics (NASDAQ:AAOI) stock is at $69.30, down 10%, a slide that lands just behind Coherent’s loss. Lumentum Holdings (NASDAQ:LITE) stock is at $770.53, down 9%. That marks a smaller decline than Coherent and Applied Optoelectronics posted, though still a steep loss for a name that climbed on AI optical demand. Each of these companies sells optical parts that move data inside AI datacenters, so shifts in sentiment toward hyperscaler spending tend to hit Coherent, Applied Optoelectronics and Lumentum shares together.
The Roundhill Photonics & Optics ETF (CBOE:LYTE) is down 10%, falling nearly as hard as Coherent, Applied Optoelectronics and Lumentum. Over in large-cap tech, the Invesco QQQ Trust (NASDAQ:QQQ) is down 2%, representing a far softer retreat for the NASDAQ 100 benchmark. That gap marks the optics selling as group-wide caution before Coherent, Applied Optoelectronics and Lumentum report quarterly results.
Chipmaker-Led Tech Selloff Pulls Optics Lower
Technology stocks are falling broadly, led by chipmakers, and the optics group is extending a slide that has erased much of its earlier gains, and Coherent, Applied Optoelectronics and Lumentum shares all remain higher for the year, a reminder of how far the group ran before this pullback took hold. Quarterly reports from Coherent, Applied Optoelectronics and Lumentum arrive in the coming weeks, and the selling reflects caution before those numbers land.
Lumentum Chief Executive Officer Michael Hurlston stated earlier this month that the company’s data center optical components are sold out for years. That demand background hasn’t shielded Lumentum shares from the chip-led selling, and Coherent and Applied Optoelectronics shares are sliding right alongside, as strong order books and falling share prices can coexist when a group has rallied hard and the broader technology sector turns lower.
Coherent, Lumentum and Applied Optoelectronics Face Different Risks
Coherent has an industrial laser business. That gives it a wider product mix than a pure-play datacenter optics supplier, though Coherent shares are trading in lockstep with AI optics names during this selloff. The company’s role in the transition from copper to optical connectivity in AI datacenters remains the heart of the bullish case.
Applied Optoelectronics depends on a small group of large customers. Vertical integration from laser chips and subassemblies through finished optical modules gives the company closer control over supply, but a delay from a single customer can weigh hard on results.
Growth projects at Lumentum span optical circuit switching, cloud modules and ultra-high-power co-packaged optics lasers, all tied to rising AI bandwidth needs. A sold-out order book supports the bullish case but raises the bar for execution, since constrained output could cap revenue growth.
Roundhill’s LYTE photonics fund counts Lumentum and Coherent among its largest holdings. That concentration explains why the fund is sliding almost in step with Lumentum and Coherent.
Optics Reports Face a Capacity Test
The coming reports from Coherent, Lumentum and Applied Optoelectronics will show whether capacity is keeping pace with demand. For Applied Optoelectronics, the open variable is order timing from its large customers.
Lumentum’s management needs to show that sold-out demand is turning into higher shipments. Until those reports arrive, investors weighing their exposure should adjust their holdings carefully given that Coherent, Applied Optoelectronics and Lumentum shares may keep trading in step with the chip sector’s swings.
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