The data center industry is buzzing with excitement after Nvidia’s recent announcement of its Blackwell graphics processing unit. This new technology has the potential to revolutionize the artificial intelligence market and drive profits for companies involved in the data center ecosystem.
One area that investors should keep an eye on is the makers of optical transceivers, which play a crucial role in transmitting and receiving large amounts of data within AI data centers. Raymond James has highlighted several under-the-radar optical materials and semiconductor manufacturers that could benefit from the increasing demand for AI data centers.
Coherent, a company that produces optical materials for various industries, is Raymond James’ top pick. With a 3% upside potential from its current price, Coherent is seen as a favorite play on the AI opportunity due to its market share and leading edge product portfolio.
Applied Optoelectronics, another player in the fiber-optic networking products space, has seen significant growth over the past year, fueled in part by its supply agreement with Microsoft. Despite a challenging year so far, analysts see potential for a 47% jump in its stock price.
Lumentum, a seller of optical and photonic products, has also attracted attention with its re-entry into the data center market through the acquisition of Cloud Light. While the stock has seen some decline, analysts believe there is room for a recovery and a potential 19.5% upside.
As the AI craze continues to drive demand for data center components, investors may find opportunities in these under-the-radar companies within the optical materials and semiconductor space. Keep an eye on Coherent, Applied Optoelectronics, and Lumentum as they navigate the evolving landscape of the data center industry.
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