Why Coherent and Lumentum stocks jumped on Tuesday

Coherent and Lumentum Holdings shares surged on Tuesday as investors piled into optical networking stocks.

The rally followed comments from Nvidia Chief Executive Jensen Huang, highlighting the growing importance of optical interconnects in artificial intelligence data centers.

The rally came alongside a sharp gain in Marvell Technology shares after Huang suggested the chipmaker could become the next trillion-dollar company.

Investors extended that enthusiasm across the broader optical networking ecosystem, lifting companies that supply critical components used in AI infrastructure.

Coherent shares COHR rose 17% to $425.64, putting the stock on track for an all-time closing high.

Lumentum gained 13%, while Corning, which produces fiber used in optical networking systems, also climbed 13%.

Nvidia comments spotlight optical networking demand

Investor enthusiasm was fueled by Huang's remarks at Marvell's Computex 2026 keynote in Taipei, where he discussed the growing need for optical connectivity as AI infrastructure scales.

According to Huang, copper remains useful for data transmission, but its limitations are becoming increasingly apparent as AI workloads expand.

"We should use copper as much as we can, for as long as we can, but copper has its limits... You use optics wherever you must, you use copper wherever you can," Huang said.

The comments reinforced a trend that many investors have already been betting on: the rapid expansion of AI data centers is creating significant demand for high-speed optical networking equipment.

Marvell manufactures digital signal processors used in optical transceivers that connect servers inside AI data centers.

Coherent and Lumentum supply critical optical components and hardware that enable those connections, making them direct beneficiaries of increased spending on AI infrastructure.

Lumentum also maintains a formal partnership with Marvell, further linking its growth prospects to demand for optical networking technologies.

Coherent emerges as another AI infrastructure winner

While Marvell attracted much of the attention following Huang's remarks, investors also turned their focus toward Coherent.

The company manufactures optical transceivers and related components that are essential for moving data across hyperscale AI clusters.

According to market observers, Coherent's exposure to AI-related optical demand is comparable to many of the more widely followed AI infrastructure companies.

Analyst sentiment has also improved. Recent ratings from TD Cowen, Rosenblatt, and Stifel carried an average price target of $410.67, although the stock now trades above those levels following its latest rally.

AI spending boom benefits broader ecosystem

The gains across optical networking stocks highlight how AI-related investments are increasingly benefiting a wide network of suppliers beyond chipmakers.

Nvidia has already committed substantial capital to photonics and optical networking companies.

Over the past three months, the company has invested $2 billion each in Lumentum and Coherent, committed $500 million to Corning for advanced optical connectivity, and participated in Ayar Labs' $500 million funding round.

Those investments, combined with Huang's latest comments, reinforced investor confidence that optical networking will remain a critical component of next-generation AI infrastructure.

The broader trend has also lifted investment vehicles tied to data center development.

The Global X Data Center & Digital Infrastructure ETF, which tracks companies across the data center ecosystem, has gained 50% this year.

For investors, Tuesday's rally underscored a growing market view that as AI clusters become larger and more complex, demand for optical connectivity providers such as Coherent and Lumentum could continue to rise alongside spending on AI infrastructure.