In this article, we will look at the 10 Best Optical Networking Stocks to Buy According to Analysts.
The generative artificial-intelligence boom is reordering priorities in the data center sector, and one of the results is rising demand for high-speed optical communications. That is among the key conclusions of a Goldman Sachs equity research report published on April 17. The bank’s analysts argued that optical networking is now the next frontier in AI infrastructure, one that will allow hyperscalers to access sufficient computing capability to continue innovating. For that reason, the researchers anticipate the total addressable market, or TAM, for AI-related networking to expand nearly ninefold, from about $15 billion in 2026 to $154 billion by 2028. All of this growth will be supported by AI data centers scaling up their GPU interconnects and migrating from copper to optical fiber connections, the analysts stated.
Goldman also projected that the aggregate dollar content of networking hardware per computing unit will increase 29 times. This massive surge will happen thanks to scale-out networking, which links AI clusters of 100,000 or more GPUs across racks, and scale-up networking, which connects GPUs within a single computing unit. Specifically, the bank’s analysts noted that optical modules, co-packaged optics (CPO), and related components will be the biggest beneficiaries of that spending. CPO alone will account for a projected $91 billion of the $154 billion TAM, said Goldman.
Goldman’s conclusions and projections simply echo what the industry has been saying for some time now. In fact, one CEO told CNBC’s Jim Cramer on May 7 that “we’re going through the single largest infrastructure buildout in human history.” He added that artificial intelligence “is going to become fundamental infrastructure all over the world.”
Another CEO told CNBC on April 23 that demand for AI and cloud services is fueling massive growth in optical networking. As a result, his company forecasts optical and IP networks growing up to 20% year over year this year. To him, the coming to life of the global optical networking industry is a major supercycle that will lift many boats.
With that in mind, the following analysis identifies 10 optical networking stocks that analysts believe are best positioned to benefit from this supercycle.
Our Methodology
To create this list, we used the Yahoo Finance screener to identify companies in the communications equipment industry, but with a bias to optical networking. To ensure we pick high-quality stocks, we required each company to be held by major ETFs with a bias toward the optical networking sector, such as First Trust Indxx NextG ETF and Corgi Lithography & Semiconductor Photonics ETF. The result was a mix of pure-play, near-pure-play, and optical networking-adjacent companies, which we narrowed down based on a positive analyst-projected upside potential as of May 25, 2026. We also ensured that the selected companies have substantial institutional interest, based on Q4 2025 hedge fund 13F filings in Insider Monkey’s database. The list is ranked in ascending order based on stock upside.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Best Optical Networking Stocks to Buy According to Analysts
10. MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI)
Stock Upside: 0.58%
Number of Hedge Fund Holders: 35
MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is one of the best optical networking stocks to buy according to analysts. On May 7, MACOM Technology Solutions Holdings, Inc. reported its Q2 2026 financial results, where it recorded $289 million in revenue, up 22.5% year over year and 6.4% higher than Q1 2026. This revenue exceeded the $285.2 million that Wall Street expected.
Management explained on the earnings call that all three of its business segments contributed to the growth. The Data Center segment led the way with $98.2 million in revenue, up about 14.5% sequentially. This increase was fueled by surging demand for pluggable optical modules and higher cable production volumes as AI infrastructure spending accelerated, said Steve Daly, the company’s President and CEO.
Daly added that the company’s adjusted (non-GAAP) EPS came in at $1.09, up from $1.02 in Q1 2026 and $0.85 a year earlier. Analysts had expected $1.07. The CEO explained that the EPS improvement tracked revenue growth and also received massive support from better product yields and higher utilization across the company’s North Carolina and Massachusetts semiconductor fabrication facilities. Gross margin also expanded to 58.5% (non-GAAP), which was up 90 basis points from the previous quarter. Management attributed the expansion to the company benefiting from scale, improved manufacturing efficiencies, and a growing share of higher-margin data center products.
MACOM Technology Solutions Holdings, Inc. is an optical networking and semiconductor company. It designs high-performance analog and mixed-signal solutions for telecom, data center, and industrial markets.
9. Clearfield, Inc. (NASDAQ:CLFD)
Stock Upside: 1.76%
Number of Hedge Fund Holders: 19
Clearfield, Inc. (NASDAQ:CLFD) is one of the best optical networking stocks to buy according to analysts. On May 18, Clearfield, Inc. announced that Caribbean Cellular Telephone Ltd. (CCT) and BVI Cable TV had successfully rebuilt a large portion of the British Virgin Islands’ communications infrastructure using Clearfield’s modular, pre-connectorized fiber technologies. Clearfield said its technology enabled the companies to cut deployment times by 50% and significantly speed up post-storm network restoration.
The British Virgin Islands, or BVI, communications infrastructure needed to be rebuilt after suffering grievous damage from two Category 5 hurricanes that hit the islands in 2017. All of CCT’s existing cable network was completely wiped out. However, CCT could not get things done in good time because its traditional vendors were slow, according to Clearfield, which is why they were engaged. The company added that the BVI also has a very limited pool of skilled fiber splicers, which made traditional fiber repair work slow and expensive.
Therefore, CCT approached Clearfield to redesign the network from scratch, a task the company completed in just a few weeks. Clearfield built the new infrastructure on four of its product lines, including FieldSmart Fiber Distribution Hub cabinets, Clearview Blue Cassettes for fiber management, FieldShield fiber and microduct solutions for outside plant deployment, and the YOURx-Terminal plug-and-play platform for last-mile connections.
The network now covers roughly one-third of all households and numerous businesses across the BVI. According to Clearfield, the network’s modular design means that when a storm damages components, technicians can swap them out quickly without waiting for skilled splicers or long vendor lead times.
Clearfield, Inc. is a fiber connectivity and broadband infrastructure company that supplies products used in optical networking deployments. The company designs and manufactures fiber management, protection, and connectivity solutions that help telecom providers, municipalities, utilities, and broadband operators expand high-speed fiber-optic networks.
8. Applied Optoelectronics, Inc. (NASDAQ:AAOI)
Stock Upside: 1.93%
Number of Hedge Fund Holders: 27
Applied Optoelectronics, Inc. (NASDAQ:AAOI) is one of the best optical networking stocks to buy according to analysts. On May 12, Applied Optoelectronics, Inc. announced it had been selected as the primary vendor to help Mediacom accelerate the upgrade and expansion of its fiber and coaxial network infrastructure. Mediacom is the fifth-largest cable operator in the US, serving over three million homes and businesses across 22 states.
For context, Mediacom announced last year its intention to bring faster upload and download speeds to approximately one million homes by the end of 2026. The company said it intends to leverage a distributed access architecture (DAA) with DOCSIS 4.0 technology to expand its fiber deployment.
Now, Applied Optoelectronics, Inc., or AOI, will help upgrade Mediacom’s legacy Gainmaker and Motorola system amplifier infrastructure. It will also supply key products for the project like the Quantum18 MB 1.8GHz Amplifier, the Quantum18 BLE 1.8GHz Line Extender, and the QuantumLink Remote Management and Monitoring Software. Altogether, these products will increase network capacity, sharpen signal quality, and deliver more reliable service, all while lowering Mediacom’s operational costs as it pushes through the multi-year DOCSIS 4.0 rollout.
AOI said Mediacom has already completed deployments in Iowa, Illinois, and Minnesota. It added that the two companies plan to continue the rollout across the rest of Mediacom’s footprint over the next two years to reach the one-million-home target.
Applied Optoelectronics, Inc. is an optical networking company. It designs and manufactures fiber-optic networking products for data center, telecom, and cable broadband markets. The company specializes in optical components and transceivers that enable high-speed data transmission across fiber-optic networks.
7. Coherent Corp (NYSE:COHR)
Stock Upside: 4.62%
Number of Hedge Fund Holders: 78
Coherent Corp (NYSE:COHR) is one of the best optical networking stocks to buy according to analysts. On May 7, Rosenblatt raised its price target on Coherent Corp. from $375 to $425, while keeping its Buy rating intact. The firm is confident in Coherent’s near-to-medium-term earnings trajectory.
Rosenblatt updated its model following Coherent’s Q3 FY2026 earnings report on May 6. In the report, Coherent’s quarterly income came in at $1.81 billion, a 21% year over year increase and 7% higher than in Q2 FY2026. CEO Jim Anderson pointed out in the earnings call that the revenue growth was primarily due to AI data center buildout. In fact, the company’s Data Center & Communications segment, which was responsible for 75% of total revenue, grew over 40% year over year during the quarter, Anderson noted.
The quarter’s non-GAAP EPS was $1.41, a 55% year over year jump, and well ahead of the $1.39 forecast. Management attributed the blowout EPS performance to the 21% top-line revenue growth that flowed through a leaner cost base, gross margin expansion, and lower interest burden.
Besides the impressive Q3 performance, Rosenblatt views Coherent’s move to ramp up production of epitaxial modulated lasers on larger 6-inch wafers as key growth catalyst. The firm believes this manufacturing shift will directly translate into stronger transceiver sales and fatter gross margins in the current quarter, Q4 FY2026.
Coherent Corp is an optical networking and photonics company. It designs and manufactures advanced laser and optical components used in fiber-optic communications systems.
6. Fabrinet (NYSE:FN)
Stock Upside: 6.56%
Number of Hedge Fund Holders: 44
Fabrinet (NYSE:FN) is one of the best optical networking stocks to buy according to analysts. On May 5, analysts weighed in on Fabrinet’s Q3 FY2026 results, where Rosenblatt raised its price target on the stock to $750 from $715.
Rosenblatt argued that Fabrinet’s optical circuit switching (OCS) and co-packaged optics (CPO) have immense potential to boost the company’s revenue. On CPO specifically, the firm noted that Fabrinet has been deliberately building out its advanced semiconductor packaging capabilities. The company has also been investing in scalable manufacturing and broader system-level integration to make itself an indispensable player in the CPO supply chain as that technology moves from early-stage development toward commercial deployment, Rosenblatt added.
Rosenblatt also pointed out that Fabrinet’s minority investment in Raytek Semiconductor, a Taiwan-based company specializing in advanced wafer-level packaging technologies, is a move that sets the company up for massive control within the CPO supply chain. In the analyst’s view, this deal means that Fabrinet has evolved from being primarily a silicon photonics manufacturer to becoming a more integrated player capable of delivering higher-value solutions at the system level within the CPO ecosystem.
For Wolfe Research, the analysts acknowledged that Fabrinet’s Q3 FY2026 earnings were solid. However, they pointed out that the sequential decline in Datacom segment’s revenue was likely to disappoint the market.
Wolfe noted that the Telecom segment posted strong performance, and that Fabrinet secured new direct-to-hyperscaler transceiver deals that bypass the traditional merchant supply chain. These two, the analysts said, are encouraging developments because they give the company a more direct line into major cloud infrastructure buildouts.
Fabrinet is an optical networking manufacturing and precision optical assembly company. It provides outsourced manufacturing services for optical transceivers, lasers, and complex electro-optical components used in data centers and telecom networks.
5. nLight, Inc. (NASDAQ:LASR)
Stock Upside: 6.95%
Number of Hedge Fund Holders: 34
nLight, Inc. (NASDAQ:LASR) is one of the best optical networking stocks to buy according to analysts. On May 21, Stifel analyst Ruben Roy raised his price target on nLIGHT, Inc. to $85 from $75, maintaining a Buy rating. Roy made the call after his firm hosted nLight’s executives.
The analyst noted that the key takeaway from the meeting was his firm’s growing faith in nLight’s directed energy portfolio, particularly the newly launched HADES product line. This product line is a range of high-power lasers designed for military applications.
Further, Stifel was encouraged by the opportunity for nLight to expand its laser sensing business. Here, Roy stated, nLight has the potential to substantially grow the volume of its components deployed across defense and industrial systems.
Stifel also came away more optimistic about international sales growth, said Roy. He noted that nLight has a credible path to winning additional programs outside the US This is because rising allied defense spending is creating a fertile environment for the company to extend its reach beyond domestic contracts.
The analyst also highlighted nLight’s Q1 FY2026 earnings, which the company shared on May 7. Quarterly revenue was $80.2 million, and adjusted EPS reached $0.22. In Q1 FY2025, the EPS was a loss of $0.04. Roy noted that these results validated nLight’s pivot with the launch of the HADES directed energy product line.
nLight, Inc. is a photonics and laser technology company that is tied to the optical networking and broader optical communications ecosystem through its high-power semiconductor lasers. The company designs and manufactures semiconductor and fiber lasers used in industrial, defense, and advanced manufacturing applications.
4. Lumentum Holdings Inc. (NASDAQ:LITE)
Stock Upside: 17.75%
Number of Hedge Fund Holders: 69
Lumentum Holdings Inc. (NASDAQ:LITE) is one of the best optical networking stocks to buy according to analysts. On May 19, AIXTRON SE announced that Lumentum Holdings Inc. had placed multiple orders for AIXTRON’s G10-AsP MOCVD systems. These are manufacturing equipment that Lumentum will use to scale up production of indium phosphide (InP)-based lasers and detectors for high-speed AI data center networks.
For context, InP-based lasers are the core components inside the optical transceivers that connect thousands of AI accelerator chips within data centers. Unlike older optical generations, these new lasers can handle massive bandwidth, which makes them ideal for AI model training and inference workloads. Lumentum supplies these components to some of the world’s largest hyperscalers.
The G10-AsP platform Lumentum ordered is AIXTRON’s latest MOCVD system. It is designed specifically for compound semiconductor materials like InP, and it gives Lumentum the ability to manufacture more chips per run with greater precision.
This order appears to be part of Lumentum’s capacity expansion push because on March 26, it announced plans for a new 240,000-square-foot manufacturing facility in Greensboro, North Carolina. Lumentum said it plans to use the facility to produce InP-based optical products. The company expects that facility to start operating in mid-2028, and it has committed several hundred million dollars to it.
Lumentum Holdings Inc. is an optical networking and photonics company. It designs and manufactures high-performance optical and laser-based components used in fiber-optic communication systems.
3. IPG Photonics Corporation (NASDAQ:IPGP)
Stock Upside: 26.05%
Number of Hedge Fund Holders: 17
IPG Photonics Corporation (NASDAQ:IPGP) is one of the best optical networking stocks to buy according to analysts. On May 6, Needham analyst James Ricchiuti upgraded IPG Photonics Corporation from Hold to Buy and set a price target of $110. Ricchiuti made the move a day after IPG shared its Q1 FY2026 earnings report.
The analyst noted that IPG’s revenue came in at $265.5 million, which was 3% above Wall Street consensus and well ahead of management’s own guidance. Also, the year over year growth of 17% far outpaced the 12% Wall Street had anticipated. Ricchiuti also pointed to the book-to-bill ratio being above 1.0 as a particularly telling signal. In other words, the analyst views this metric as evidence that new orders are coming in faster than IPG is fulfilling them.
Ricchiuti acknowledged that IPG is currently spending more on operations as it invests to drive future revenue growth. For that reason, Needham raised its 2026 and 2027 revenue estimates but also slashed its 2026 EPS estimate. The analyst views this tradeoff as acceptable given the direction of the business.
The analyst also highlighted the Q2 FY2026 gross margin guidance as an encouraging signal. He noted that if demand continues on its current trajectory, the operating leverage in the business could deliver positive surprises at the earnings level. Put simply, Ricchiuti anticipates revenue growth to eventually outpace the cost increases and allow margins to recover more sharply than the market currently expects.
IPG Photonics Corporation is a photonics and fiber laser company that provides high-performance laser technologies to the optical networking industry. The company designs and manufactures fiber lasers, amplifiers, and laser systems primarily used in industrial manufacturing, materials processing, and medical applications.
2. VIAVI Solutions Inc. (NASDAQ:VIAV)
Stock Upside: 31.29%
Number of Hedge Fund Holders: 28
VIAVI Solutions Inc. (NASDAQ:VIAV) is one of the best optical networking stocks to buy according to analysts. On May 19, VIAVI Solutions Inc. priced a public offering of about 11.1 million shares of common stock at $45 per share. The offering closed just two days later on May 21, and generated approximately $500 million in net proceeds after underwriters exercised their 30-day option to purchase up to an additional 1,666,666 shares at the same offering price.
VIAVI said it plans to use most of the proceeds to repay the $450 million remaining principal balance on its Term Loan B. It will allocate the surplus to general working capital needs.
Separately, on May 5, VIAVI launched the CyberFlood CF1000, a native 400G security and application performance test appliance. VIAVI said it designed the appliance to help network equipment vendors, hyperscale data center operators, and service providers validate the reliability and security of complex, high-speed AI infrastructure before it goes live.
VIAVI stated that this product matters because, as data centers are rebuilt to support AI workloads, the traffic they carry is not only far faster and denser than before, but also far more encrypted and dynamic. However, traditional test systems were not built for this environment and leave critical blind spots in the validation process. As such, the company positions the CF1000 as the tool to close those gaps.
VIAVI Solutions Inc. is an optical networking test, monitoring, and assurance company. It provides critical equipment for validating and maintaining fiber-optic communication networks. The company develops testing instruments, network performance monitoring systems, and assurance software that telecom operators, data center providers, and equipment manufacturers use to ensure the reliability and performance of high-speed optical networks.
1. Ceragon Networks Ltd. (NASDAQ:CRNT)
Stock Upside: 59.77%
Number of Hedge Fund Holders: 8
Ceragon Networks Ltd. (NASDAQ:CRNT) is one of the best optical networking stocks to buy according to analysts. On May 19, Ceragon Networks Ltd. reported its Q1 2026 financial results, where revenue touched $85.0 million, down 4.1% year over year, but comfortably ahead of the Wall Street consensus of $80.4 million. CEO Doron Arazi attributed the year-over-year dip to a “timing issue.” This refers to the fact that large Indian operator orders only began converting into recognized revenue midway through the quarter.
“We are working closely with the customer and relevant component vendors on a catch-up plan,” Arazi told investors on the earnings call.
Nonetheless, India contributed 35% of the total revenue during the quarter. In fact, Arazi noted, this is the primary reason revenue beat estimates. The CEO added that by early May, the company had already booked roughly $86 million in orders from Indian operators year-to-date, and that these were concentrated in just two leading telecom providers. Of that, Ceragon recognized only about $24 million as revenue in Q1, and expects the remainder to flow through by year-end.
The quarter’s non-GAAP EPS came in at $0.01 per diluted share, compared to $0.03 per diluted share for Q1 2025. GAAP gross margin expanded from 32.8% to 35.4% year over year.
On his part, company CFO Ronen Stein stated that management reiterated its full-year 2026 outlook, where it expects revenue of $355 million to $385 million, non-GAAP gross margin improvement of 100 basis points at the midpoint of the revenue range, and non-GAAP operating margin of 6.5%-7.5%.
Ceragon Networks Ltd. is a wireless transport and backhaul networking company that supports high-capacity communications infrastructure used alongside fiber and optical networks.
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