Deutsche Bank: AI's Next Wave Is About Connectivity — Lumentum and Coherent Are Top Optical Networking Picks — BigGo Finance
Deutsche Bank analyst Gianmarco Conti highlights the shift in AI infrastructure investment towards connectivity, benefiting optical component manufacturers. He rates Lumentum (LITE-US) and Coherent (COHR-US) as top picks, citing strong demand, supply constraints, and Nvidia's (NVDA-US) investments. Both companies reported significant revenue growth and high margins. Conti also rated Arista (ANET-US), Cisco (CSCO-US), and HPE (HPE-US) as 'Buy', with risks including supply expansion and AI spendin
How this was made
The 30-second read
Why it matters
Analyst coverage with explicit guidance can trigger short‑term price moves and influence sector sentiment.
Market read
The report underscores a shift in AI infrastructure spending toward connectivity, potentially lifting related hardware stocks.
What to watch
Potential competition from emerging Asian optical component makers could pressure pricing.
Background
Deutsche Bank released a new research report focusing on AI connectivity hardware, naming Lumentum and Coherent as top picks.
Ticker impact
Deutsche Bank analyst initiates coverage on Lumentum, assigning a Buy rating and providing Q1 2027 revenue guidance of $1.225‑$1.275 B.
Buy pressure expected ahead of Q1 earnings.
Analyst upgrade with specific revenue targets and margin expectations can drive short‑term buying.
Deutsche Bank analyst initiates coverage on Coherent, assigning a Buy rating and noting Q1 2027 revenue of $2.05 B with 40.2% gross margin.
Likely rally before earnings release.
Buy rating plus detailed margin outlook supports near‑term price appreciation.
Market effects
Highlights growing demand for optical networking components in AI data centers, benefiting the broader semiconductor and networking equipment sector.
U.S. semiconductor and networking stocks may see increased buying pressure.
AI infrastructure spending worldwide could boost global optical component suppliers.
Counterpoint
If supply tightness eases faster than expected, margin expansion may stall, limiting upside.
Key entities
- financial_institutionDeutsche Bank
Issuer of the research report.
- companyLumentum Holdings
Optical component manufacturer receiving a Buy rating.
- companyCoherent
Laser and optical systems maker receiving a Buy rating.
