AAOI, Lumentum, and Coherent Are the AI Trade Nobody's Talking About — And That's the Point
While everyone panicked about the Mag 7 pullback, supply-constrained photonics and memory plays held firm — and the Iran peace deal just poured rocket fuel on the setup
Ticker Ratings
| Ticker | Rating | Entry Price | Current | $ Gain | % Gain |
|---|---|---|---|---|---|
| AAOI APPLIED OPTOELECTRONICS, INC. | buy | $170.40 | — | — | — |
| LITE Lumentum Holdings Inc. | buy | $921.00 | — | — | — |
| COHR COHERENT CORP. | buy | $386.50 | — | — | — |
| WDC WESTERN DIGITAL CORP | buy | $566.50 | — | — | — |
| MSFT MICROSOFT CORP | hold | $390.68 | — | — | — |
| GOOGL Alphabet Inc. | hold | $360.87 | — | — | — |
| META Meta Platforms, Inc. | hold | $569.30 | — | — | — |
| AMZN AMAZON COM INC | buy | $238.66 | — | — | — |
| ORCL ORACLE CORP | sell | $183.94 | — | — | — |
While finance Twitter was busy writing AI's obituary, The Traveling Trader on YouTube was quietly pointing at a different chart entirely. $AAOI, LITE (Lumentum), and COHR (Coherent) — the photonics trio — showed relative strength during a selloff where the NASDAQ dropped 8% and the S&P fell 5%. The thesis: supply constraints in optical components run through 2027–2028, meaning these names aren't riding the AI hype cycle — they're supplying the plumbing regardless of which chatbot wins.
Meanwhile, memory plays like WDC (SanDisk's parent, post-spinoff) held similarly firm, while the Mag 7 crowd — MSFT, GOOGL, META — got roasted by an Andrei Jikh deep-dive citing FT analysis showing negative implied returns on AI CapEx under nearly every scenario. Microsoft at -9.2%, Google at -15.7%, Meta at -28.8%. Only Amazon posts a positive return at a 7.2% whisker.
And then the Iran peace deal dropped — crude hits a three-month low, inflation expectations ease, Treasury yields fall 6 basis points, and suddenly every rate-sensitive infrastructure play gets a tailwind it didn't have Monday morning. The boring picks are having a moment, and the market's finally paying attention.