These AI Stocks Will Make Millionaires By 2029 | Ticker Symbol: YOU

The Gist

Coherent is the superior investment choice over Lumentum due to its vertically integrated manufacturing and dominant scale in indium phosphide production. Both optical networking stocks offer tremendous upside driven by AI datacenter demand, but Coherent has secured a multi-billion dollar partnership and a massive supply advantage.

Quick Overview

Coherent emerges as the preferred investment between the two optical networking stocks analyzed in the video, though both companies benefit heavily from AI infrastructure growth. The analysis evaluates Coherent and Lumentum based on their market position, financial results, capital expenditures, and supply chain bottlenecks related to indium phosphide lasers. Coherent wins out because its comprehensive supply chain control and larger multi-year commitments from NVIDIA provide better downside protection and higher growth scaling.

Key Points: Coherent reported two billion dollars in revenue for its latest quarter, marking a 34 percent year-over-year increase with gross margins hitting 38.5 percent. Lumentum achieved one billion dollars in revenue for its fourth fiscal quarter, representing a 109 percent year-over-year increase with adjusted gross margins at 50.4 percent. NVIDIA invested two billion dollars into both Coherent and Lumentum on March 2, 2026, to secure advanced optical networking supplies for its AI datacenters. Indium phosphide is currently facing a severe global shortage because laser demand exploded with the AI revolution and supply is concentrated among only three manufacturers. Coherent operates vertically integrated facilities producing six-inch wafers, allowing them to quadruple production capacity by the end of next year. Lumentum spends roughly 60 cents in capital expenditures for every dollar of revenue generated, whereas Coherent spends approximately 14 dollars in capital expenditures for every dollar of revenue. The global market for optical transceivers is projected to grow from 23 billion dollars in 2025 to 112 billion dollars in 2031, representing a compound annual growth rate of 30 percent.