The end of AI is light: A multi-bagger supply chain map most are overlooking

Compiled & Translated by: Shenchao TechFlow

Host: Brian, former employee at Target & Amazon

Podcast Source: BWB - Business With Brian

Original Title: Millionaires are Hitting These 10X Stocks HARD!

Air Date: June 21, 2026

Key Takeaways

The true bottleneck in AI data centers isn't a single chip winner, but the entire photonics supply chain that converts electrical signals into optical signals and transports massive amounts of data. Brian's core thesis: as the industry upgrades from 800G to 1.6T, and eventually to 3.2T, the companies that capture the most outsized returns are often not the hottest headline-making names, but essential suppliers like Corning, Amphenol, and Ciena that all major players must rely on, along with upstream materials and testing segments. This podcast provides a comprehensive breakdown of the complete photonics supply chain and identifies the high-growth golden stocks you need to watch closely before the Wall Street herd rushes in.

Key Insights Summary

Why AI Data Centers Must Transition to Optical Communication

• "Copper is hitting a physical limit. Every data center will eventually have to transition to optics. China has already proven to the entire industry that this path can go even further."
• "Once data needs to travel beyond about 3 feet, copper rapidly loses its advantage, generating more heat and consuming more power; optics can solve all these problems simultaneously."
• "Transitioning from electricity to light – that is the core significance of photonics technology."

Why Investment Opportunities Often Lie in the Supply Chain, Not Headline Companies

• "Once a new technology is proven to work, the greatest wealth often flows first to the companies that all participants must rely on, not just the single name making headlines."
• "Glass, lasers, connectors, materials, and testing equipment – none are dispensable. This is where the most value lies in the photonics industry chain."

Why Corning is Key

• "Corning's optical communications revenue grew 36% last quarter, but corresponding profits grew 93%. This shows that pricing power and economies of scale are materializing simultaneously."
• "Corning has become a designated core supplier for Meta, Amazon, Google, Microsoft, OpenAI, and Nvidia. No other competitor in the world has such a client list. These relationships have already translated into locked-in, multi-year revenue."
• "Meta committed up to $6 billion, Amazon signed multi-billion dollar contracts, and two other hyperscalers signed agreements of similar magnitude. This revenue is locked in years before the fiber is even actually drawn."

What Amphenol and Credo Represent Respectively

• "If you want a broader coverage, less volatile, and reasonably valued optical interconnect play, Amphenol is a name worth watching long-term."
• "Credo acts as a bridge between the old world and the new, squeezing the last bit of life out of intra-rack copper while also extending into the optical communication side."
• "Credo's risks are clear: extremely high customer concentration. If just one large customer pauses procurement, the stock price could take a significant hit."

Opportunities in the System Layer, Upstream Materials Layer, and Testing Layer

• "Ciena's value lies in enabling existing fiber to carry more data without the need for re-digging and laying new cables."
• "AXT operates further upstream, almost acting as the sole supplier of critical wafer materials for optical lasers. However, it also faces significant risks related to Chinese export licenses."
• "VEO Solutions is more like the 'pick-and-shovel seller' in the optical communications world. Whether it's fiber links, transceivers, or system equipment, everything needs testing before deployment and monitoring during operation. VEO sells the testing tools that all this equipment must pass through."

Thematic Allocation and ETF Selection

• "If you don't want to pick individual stocks yourself, there are now pure-play photonics ETFs available for one-click coverage of this theme."
• "However, these funds are newly established, small in scale, and have relatively high expense ratios. They are suitable for a watchlist first, rather than blindly chasing highs."

China Has Significantly Raised the Ceiling for Optical Fiber Transmission

Brian:

Engineers recently lit up a single strand of glass fiber in China with a data carrying capacity five times higher than anything else currently in operation worldwide. This isn't a newly laid line or a massive excavation project. It involved activating a single fiber, thinner than a human hair, within an already buried cable. Previously, transferring the entire Library of Congress data might have taken half an hour; now it takes about five minutes.

This technology hasn't really been deployed in the US yet, which illustrates just how fast this field is evolving. AI is generating a data deluge that surpasses current transmission capabilities, and US data centers are increasingly short of this capacity. All hyperscale cloud providers will eventually need it, and they won't build the entire system from scratch. They will buy it.

They will buy glass, lasers, and the chips that convert electricity to light. The suppliers who can truly provide these components are surprisingly few. Having spent years on the procurement side of the supply chain, my experience tells me the pattern for such opportunities rarely changes. Once a new technology is proven to work, the greatest wealth often flows first to the companies that all participants must rely on, not just the single name making headlines.

Why Photonics Technology Has Become the Core Variable Now

Brian: Today, I want to break down the entire photonics industry chain for you, and clarify the listed companies at each layer. Why photonics, and why now?

The answer boils down to a hard constraint. Inside a data center, all chips need to communicate with each other. For short distances, copper still wins; but once you want to transmit data beyond about 3 feet, copper's problems rapidly emerge – the longer the distance, the worse the heat and power consumption.

Optics solves all these problems almost simultaneously. It transmits further, generates less heat, and consumes only a fraction of the power of copper solutions. Transitioning from electricity to light – that is the core significance of photonics technology.

More importantly, this turning point is now very clear. Every data center is upgrading from 800G connections to 1.6T, and even 3.2T is already on the table. Meanwhile, the Chinese fiber mentioned earlier has pushed the industry's ceiling higher overall.

Breaking it down, the most critical layers include: the glass, fiber, and cables that actually carry the optical signals; the connectors tying everything together; the system equipment responsible for lighting the fiber and transmitting data between buildings and countries; and the more foundational materials and testing equipment. I've covered chips, lasers, and silicon photonics separately in previous videos, so today I'll focus on these often-overlooked but equally profitable segments.

Within these groups, I'll name some names worth adding to your watchlist. But let me be clear upfront: many of these tickers have already run up significantly. Truly favorable entry points will likely require a pullback.

At the Glass and Fiber Layer, Why Corning is the Most Worth Watching

Brian:

Let's start with the most basic layer – glass. The first name is Corning. This is a 175-year-old materials company that actually draws the optical fiber – the "glass thread" mentioned at the beginning of the video. It holds roughly a 20% share of the global fiber market, making it a very core player.

Where Corning truly differentiates itself is in technology. Its latest generation of fiber can pack about twice the number of fiber cores into the same physical space compared to standard cables. This is precisely the capability that extremely crowded AI data centers need most. Its bend-insensitive glass is also very difficult for competitors to replicate. Add to that the world's largest fiber manufacturing plant and its US-based supply compliant with "Buy America" rules. Together, these factors form its true moat.

Consequently, Corning has become a designated core supplier for Meta, Amazon, Google, Microsoft, OpenAI, and Nvidia. No other competitor in the world has such a client list. And these relationships aren't just about "good cooperation"; they've already translated into locked-in, multi-year revenue.

Industry demand for fiber is currently growing roughly 22% to 25% annually, but the entire industry's new supply capacity is only about half that growth rate. Lead times have stretched to over 60 weeks. This means hyperscalers book capacity years in advance, sometimes even pre-paying to lock it in. Meta committed up to $6 billion, Amazon signed multi-billion dollar contracts, and two other hyperscalers signed agreements of similar magnitude. This revenue is locked in years before the fiber is even actually drawn.

What catches my eye the most is the profit leverage. Corning's optical communications revenue grew 36% last quarter, but segment profits grew 93% – more than double the revenue growth rate. This is what pricing power and economies of scale look like simultaneously. At the company-wide level, its operating margin has improved from about 8% two years ago to over 16% now, with management targeting 20% by the end of this year.

Of course, the realistic side must be acknowledged: this story is no longer a secret. Corning currently trades at a PEG ratio near 3 and a price-to-sales ratio around 9x. For a materials company, that's not cheap. So, if you want the most stable, least dramatic way to gain exposure to the fiber layer, Corning is suitable. But the more sensible approach would be to wait for a more decent pullback.

Core Companies in the Interconnect Layer: Amphenol and Credo

Brian:

Next, we move to the connectivity layer – the layer that actually connects all the components together. The first name here is Amphenol. It's a relatively understated giant that manufactures high-speed connectors and cables, covering both copper and optics. Today, you can find its products in virtually every new AI server rack.

The key to understanding Amphenol is that it operates as a highly efficient M&A machine. In January this year, it spent $10.5 billion to acquire CommScope's entire fiber optic connectivity business. Overnight, it transformed from a connector company into a significant player in fiber optics. Now, the AI data center business has become the core engine for the entire company, its largest single segment, with organic growth exceeding 80% last quarter.

Its backlog has also reached a record $9.4 billion, with new orders still outpacing shipments. As quarterly revenue jumped from around $4 billion to just over $7 billion, its operating margin didn't get dragged down; instead, it expanded from 22% to nearly 28%.

This is quite noteworthy. Normally, a roughly $10 billion acquisition would subject a company to integration pressure for a year or two, with margins typically declining first. However, Amphenol's margins actually increased. This demonstrates its strong capability to rapidly integrate acquired targets into its own high-standard operational system. As a result, this massive deal didn't become a burden but acted as a profit enhancer.

What's even rarer is that its valuation isn't unreasonable. Amphenol's PEG ratio is around 0.7, and its price-to-sales ratio is about 7x. For a company growing this fast, this kind of valuation is uncommon. So, if you want a broader coverage, less volatile, and reasonably valued optical interconnect play, Amphenol is a name worth watching long-term.

Another name in the connectivity layer is Credo Technology. Its role is more like a bridge between the old world and the new. On one hand, it uses low-power chip technology to squeeze the maximum possible transmission capacity out of intra-rack copper cables. On the other hand, it's also developing optical communication chips and cables, allowing for a seamless transition when signals need to travel farther.

It recently acquired a silicon photonics company, completing its end-to-end product stack to support 1.6T, and is now shipping to all of the top five US hyperscale cloud providers. Its growth has been nothing short of phenomenal. In just six quarters, its quarterly revenue surged from $135 million to $437 million, more than tripling.

Another telling indicator is its gross margin of roughly 68%. This number looks more like a software company than a hardware company. Concurrently, its operating margin has nearly doubled to 37% as scale increases. Management's revenue guidance for the next fiscal year still points to over 80% growth.

However, the risks here are very specific and must be carefully considered. Although it supplies all five major customers, just three of them account for 88% of the company's revenue. If one of these hyperscalers slows down procurement, this stock could be quickly and severely punished by the market. Compounding this, insiders have been consistently selling shares during the rally. With the current price-to-sales ratio around 35x, the market is essentially pricing in "almost everything continuing to go perfectly". The PEG ratio is near 1, indicating strong growth, but this type of company is more of a high-conviction play to consider only after a deep correction.

The Real Key Player in the System Layer: Ciena

Brian:

Moving further up the stack, we reach the system layer that lights up the fiber and moves data between buildings and countries. The most critical name here is Ciena. It's the Western leader in coherent optics. Its proprietary WaveLogic technology is the world's first solution that packs 1.6T of data into a single optical wavelength. You can think of it as a "cheat code" for expanding capacity without digging, because it enables existing fiber to carry more data without the need for re-laying cables.

And this isn't just a lab demonstration. In just two quarters, this single product has already won 49 customers. Simultaneously, its position with large customers is extremely strong. Its relevant solutions have been adopted by three of the top four hyperscale cloud and cloud service providers, and cloud customers now contribute nearly half of the company's revenue.

For me, the most critical data point is still the order backlog. Last quarter, Ciena's backlog increased by about $2 billion in 90 days, reaching nearly $7 billion. Almost all of this is scheduled for delivery next year, meaning it has already locked in over a year's worth of revenue.

As revenue hits record highs with 40% year-over-year growth