A technician works at an Amazon Web Services AI data center in New Carlisle, Indiana, on October 2, 2025 (Noah Berger/Getty Images)

Optics stocks rise as executives signal more AI-related demand

Optics companies have rallied this year on expectations of higher demand for the components they make.

J. Edward Moreno

Optics companies Applied Optoelectronics, Lumentum, and Coherent rose Wednesday on signs that their products are in high demand as artificial intelligence infrastructure expands.

All three stocks were up in recent premarket trading. Applied and Lumentum were up 9.1% and 7%, respectively, while Coherent was up 2.8%. These firms offer solutions that use light rather than electricity to move information around in data center environments.

Speaking at the Optical Fiber Communications Conference in Los Angeles on Tuesday, Wupen Yuen, head of cloud and networking at Lumentum, said:

“Some customers are asking for a billion lasers a year. Starting with a B. It used to be in the millions, now it’s in the billions, so the amount of scale is just unimaginable... Because it used to be optics is a way for communicating. Now optics is part of compute. The AI does not scale, period, full stop, without optics.”

Coherent CEO Jim Anderson said silicon photonics is poised to replace copper in AI data centers because it is more efficient:

“The reason that we’re now starting to see photonics migrate into the scale-up network is the same reason that photonics took over scale-out and scale-across. And the reason is that you take any length of distance in the data center, whether it’s 3 meters or 3 kilometers, and if you crank up the data rate and if you crank up the total amount of bandwidth, eventually you hit a point where photonics is the most power-eﬃcient, fastest way to transmit that data across that length of distance. And so now what we’re starting to see is to continue to drive data center architecture, now adoption of photonics and scale-up.”

Applied Optoelectronics also said it’s going to increase its capacity by about 30% this year and double its anticipated capacity for 2027.

Optics companies have rallied this year on expectations of higher demand for their components. Earlier this month, Nvidia said that it would invest $2 billion apiece in Coherent and Lumentum to develop their advanced optics technologies.

36m

Hyperscalers and hard hats

If you build it, gains will come

Matt Phillips

Luke Kawa

Federal Reserve leaves rates unchanged; dot plot still signals lower rates in the cards for 2026

A relatively dovish reaction function from the US central bank.

Fed Chair Jerome Powell Holds An News Conference On Interest Rates

Matt Phillips2h

Constellation, Talen, and NRG surge as BNP analysts see “golden (AI)ge” ahead for them

Power producers Talen Energy, Constellation Energy, and NRG jumped Wednesday, benefiting in part from a rosy write-up by analysts at BNP Paribas, who launched coverage of all three at “outperform” and argued that the AI energy trade — a big AI-related winner in recent years that has lagged a bit recently — is due for a second wind.

That view was in a broad note on the independent power producer segment of utilities industry that the analysts published Wednesday, titled “The Golden (AI)ge of IPPs.”

Here’s the gist of it:

US independent power producers (IPPs) have lagged the AI basket for 6+ months, after garnering much attention in 2023-1H25. Investors are caught up in the minutia of perceived headwinds: underwhelming pace of power purchase agreement deals, distributed behind-the-meter solutions stealing the ‘time-to-power’ edge, pressure for data centers to bring generation and not tighten the grid, etc.

And yet, as we demonstrate, despite all this noise, the wave of rising load is at the cusp of an acceleration that will nonetheless overwhelm new supply—well into the 2030s, in our view. Hop on or risk missing the resurgent AI trade this decade.

BNP’s price targets for the stocks — Constellation ($407), NRG ($232) and Talen ($549) — implied gains of 32%, 50%, and 68% respectively. (Though today’s gains would reduce those potential upside targets somewhat for new buyers.)

US independent power producers (IPPs) have lagged the AI basket for 6+ months, after garnering much attention in 2023-1H25. Investors are caught up in the minutia of perceived headwinds: underwhelming pace of power purchase agreement deals, distributed behind-the-meter solutions stealing the ‘time-to-power’ edge, pressure for data centers to bring generation and not tighten the grid, etc.

And yet, as we demonstrate, despite all this noise, the wave of rising load is at the cusp of an acceleration that will nonetheless overwhelm new supply—well into the 2030s, in our view. Hop on or risk missing the resurgent AI trade this decade.

Luke Kawa6h

Chinese tech giants rally after hiking AI prices

ADRs of Alibaba and Baidu are gaining in early trading after the Chinese tech giants announced AI price hikes.

Alibaba said that it’s hiking the price of its AI chips by up to 34% and raising the cost of cloud storage by 30%, with Baidu planning on increasing AI cloud product prices by up to 30%.

Tech companies in China and the US are aiming to show that AI is not just a technological breakthrough but also a core tool for moneymaking. And, well, raising the price of what you sell is one of the most basic ways to make more money!

“Baidu’s decision to raise AI cloud product prices by as much as 30%, according to Bloomberg News, is a positive development that signals a shift toward monetization rather than price competition,” wrote Bloomberg Intelligence analysts Robert Lea and Jasmine Lyu. “Baidu’s move mirrors similar steps by Tencent, Alibaba, and Zhipu, catalyzed by surging demand for agentic AI following the launch of OpenClaw.”

Luke Kawa7h

The Iran war is producing the sharpest spike in US gas prices since Hurricane Katrina

The average US national gas price jumped a little more than $0.05 to $3.84 on Wednesday, per the American Automobile Association, its highest level since September 2023.

While front-month West Texas Intermediate futures have come off the boil, down roughly 20% from their March 8 peak, front-month gasoline futures are trading about 2% shy of their 2026 peak as of 8:20 a.m. ET.

Prediction markets currently imply that gas prices will end the month near (but below) $4.30 per gallon.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

Prices are up nearly 29% over the past 20 days, per AAA, making this the sharpest such rise in fuel costs in more than two decades.

Hurricane Katrina, which made landfall in the US in late August 2005, was one of the deadliest and costliest natural disasters in American history. The damage wreaked havoc on energy infrastructure in the region, prompting gas prices to jump above $3 per gallon by early September from less than $2.30 in early August.