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Bet on These Photonics ETFs to Exploit the Next Wave of AI Revolution
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Key Takeaways
Nvidia committed at least $6.5 billion to photonics companies over the prior three months.
Optical networking's market is projected to grow from $15 billion in 2026 to $154 billion by 2028.
ETFs like LYTE offer diversified exposure to companies driving photonics and optical AI infrastructure.
Photonics is rapidly gaining traction in AI infrastructure. As of May 2026, Nvidia (NVDA - Free Report) had committed at least $6.5 billion to photonics companies over the prior three months, including $500 million to Corning (GLW - Free Report) for advanced optical connectivity solutions and $2 billion each to Lumentum (LITE - Free Report) , Coherent (COHR - Free Report) and Marvell (MRVL - Free Report) (as cited in CNBC).
The impact has been significant, with Marvell shares gaining 183.4% year to date, while Lumentum, Corning and Coherent have advanced 142.5%, 68.8% and 60.3%, respectively.
Looking ahead, Goldman Sachs projects the total addressable market for optical networking to grow from roughly $15 billion in 2026 to about $154 billion by 2028 — reflecting a more than ninefold increase.
This explosive growth projection puts a bright spotlight on photonics stocks, and the exchange-traded funds (ETFs) that hold them, for investors eager to gain exposure to AI's next wave of revolution.
Before identifying these ETFs, however, it is crucial to understand the connection between photonics and the AI boom — and why this may be an opportune time for investors to enter this industry.
The Connection Between Photonics and AI: Why "Light" Is Replacing "Copper"
AI training clusters have expanded from hundreds of GPUs to tens of thousands. Copper interconnects are hitting physical limits on three fronts simultaneously — bandwidth, distance and power. The higher the data rate, the worse copper's signal integrity and the greater its power consumption. When AI clusters span multiple racks, the distance between chips exceeds what copper can efficiently serve.
On the contrary, since photonics uses light instead of electrical signals to transmit data, it offers significantly higher bandwidth and lower power consumption.
Recognizing the advantages of photonics over copper, other hyperscalers, apart from Nvidia, are also investing in this transition.
Microsoft’s Azure became the first major cloud provider to deploy 3M expanded-beam optical technology, which makes connections more tolerant of dust and wear, faster to install, and less maintenance-intensive.
Amazon has signed a multi-year multi-billion-dollar fiber-optic supply agreement with Corning to support its expanding U.S. data center infrastructure.
Further, Nvidia has joined AMD, Broadcom, Meta, and OpenAI to establish the OCI (Optical Compute Interconnect) multi-source agreement standard, standardizing the optical physical layer so chips from different vendors can communicate over the same optical layer.
Will AI Boom Fuel the Next Leg of Photonics’ Rally
In particular, co-packaged optics (CPO) adoption is expected to accelerate starting in 2027, reaching roughly 20% to 30% penetration by 2028.
As large-scale adoption of photonics is anticipated to unfold from 2028 onward, driven by the production ramp-up of Nvidia’s Rubin platform and the maturation of the CPO ecosystem, photonics companies could see orders and revenues enter a period of accelerated growth.
Looking at broader industry data, Mordor Intelligence estimates that the global photonics market will reach $1.46 trillion by the end of 2026, supported by steady demand as AI, cloud computing and high-speed networking require faster and more efficient data transmission.
Photonics ETFs Worth Considering Now
Considering the aforementioned discussion, investors interested in gaining exposure to the photonics market’s boom via diversification can consider adding the following ETFs to their portfolio:
This fund, with assets under management (AUM) worth $254.2 million, offers exposure to a concentrated basket of 19 global photonics and optics companies. Its top holding is Lumentum (with a 15.34% weightage), while Coherent (12.95%) holds the fourth spot in this fund.
LYTE charges 65 basis points (bps) in fees. It traded at a good volume of 2.13 million shares in the last trading session.
This fund, with net assets worth $9.76 million, offers exposure to companies shaping the future of photonics and optical AI infrastructure. LITE holds the third spot in this fund, with a 6.52% weightage, while COHR holds the fourth spot with 5.93% weightage. MRVL holds the sixth position with 5.65% weightage.
LUMA charges 65 basis points in fees. It traded at a volume of 0.02 million shares in the last trading session.
This fund, with net assets worth $94 million, offers exposure to 27 companies enabling faster data movement between the chips, servers, and data centers powering AI. LYTE holds the first spot in this fund, with a 14.63% weightage.
LAZR charges 75 basis points in fees. It traded at a volume of 0.11 million shares in the last trading session.
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Bet on These Photonics ETFs to Exploit the Next Wave of AI Revolution
Key Takeaways
Photonics is rapidly gaining traction in AI infrastructure. As of May 2026, Nvidia (NVDA - Free Report) had committed at least $6.5 billion to photonics companies over the prior three months, including $500 million to Corning (GLW - Free Report) for advanced optical connectivity solutions and $2 billion each to Lumentum (LITE - Free Report) , Coherent (COHR - Free Report) and Marvell (MRVL - Free Report) (as cited in CNBC).
The impact has been significant, with Marvell shares gaining 183.4% year to date, while Lumentum, Corning and Coherent have advanced 142.5%, 68.8% and 60.3%, respectively.
Looking ahead, Goldman Sachs projects the total addressable market for optical networking to grow from roughly $15 billion in 2026 to about $154 billion by 2028 — reflecting a more than ninefold increase.
This explosive growth projection puts a bright spotlight on photonics stocks, and the exchange-traded funds (ETFs) that hold them, for investors eager to gain exposure to AI's next wave of revolution.
Before identifying these ETFs, however, it is crucial to understand the connection between photonics and the AI boom — and why this may be an opportune time for investors to enter this industry.
The Connection Between Photonics and AI: Why "Light" Is Replacing "Copper"
AI training clusters have expanded from hundreds of GPUs to tens of thousands. Copper interconnects are hitting physical limits on three fronts simultaneously — bandwidth, distance and power. The higher the data rate, the worse copper's signal integrity and the greater its power consumption. When AI clusters span multiple racks, the distance between chips exceeds what copper can efficiently serve.
On the contrary, since photonics uses light instead of electrical signals to transmit data, it offers significantly higher bandwidth and lower power consumption.
Recognizing the advantages of photonics over copper, other hyperscalers, apart from Nvidia, are also investing in this transition.
Microsoft’s Azure became the first major cloud provider to deploy 3M expanded-beam optical technology, which makes connections more tolerant of dust and wear, faster to install, and less maintenance-intensive.
Amazon has signed a multi-year multi-billion-dollar fiber-optic supply agreement with Corning to support its expanding U.S. data center infrastructure.
Further, Nvidia has joined AMD, Broadcom, Meta, and OpenAI to establish the OCI (Optical Compute Interconnect) multi-source agreement standard, standardizing the optical physical layer so chips from different vendors can communicate over the same optical layer.
Will AI Boom Fuel the Next Leg of Photonics’ Rally
Photonics’ growth opportunities remain substantial.
In particular, co-packaged optics (CPO) adoption is expected to accelerate starting in 2027, reaching roughly 20% to 30% penetration by 2028.
As large-scale adoption of photonics is anticipated to unfold from 2028 onward, driven by the production ramp-up of Nvidia’s Rubin platform and the maturation of the CPO ecosystem, photonics companies could see orders and revenues enter a period of accelerated growth.
Looking at broader industry data, Mordor Intelligence estimates that the global photonics market will reach $1.46 trillion by the end of 2026, supported by steady demand as AI, cloud computing and high-speed networking require faster and more efficient data transmission.
Photonics ETFs Worth Considering Now
Considering the aforementioned discussion, investors interested in gaining exposure to the photonics market’s boom via diversification can consider adding the following ETFs to their portfolio:
Roundhill Photonics & Optics ETF (LYTE - Free Report)
This fund, with assets under management (AUM) worth $254.2 million, offers exposure to a concentrated basket of 19 global photonics and optics companies. Its top holding is Lumentum (with a 15.34% weightage), while Coherent (12.95%) holds the fourth spot in this fund.
LYTE charges 65 basis points (bps) in fees. It traded at a good volume of 2.13 million shares in the last trading session.
KraneShares Photonic and Optical ETF (LUMA - Free Report)
This fund, with net assets worth $9.76 million, offers exposure to companies shaping the future of photonics and optical AI infrastructure. LITE holds the third spot in this fund, with a 6.52% weightage, while COHR holds the fourth spot with 5.93% weightage. MRVL holds the sixth position with 5.65% weightage.
LUMA charges 65 basis points in fees. It traded at a volume of 0.02 million shares in the last trading session.
Tema Photonics & Optical ETF (LAZR - Free Report)
This fund, with net assets worth $94 million, offers exposure to 27 companies enabling faster data movement between the chips, servers, and data centers powering AI. LYTE holds the first spot in this fund, with a 14.63% weightage.
LAZR charges 75 basis points in fees. It traded at a volume of 0.11 million shares in the last trading session.