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.
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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. (NASDAQ:MTSI) 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. (NASDAQ:MTSI) 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. (NASDAQ:CLFD) 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. (NASDAQ:CLFD) 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. (NASDAQ:AAOI) 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. (NASDAQ:AAOI) 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. (NYSE:COHR) 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 (NYSE:COHR) 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 (NYSE:FN) 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 (NYSE:FN) 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.
While we acknowledge the potential of FN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FN and that has 100x upside potential, check out our report about the cheapest AI stock.
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