Shares in Lumentum Holdings and Coherent took a hit this year from investor worries over the technology road map of chipmaker Nvidia. A Raymond James analyst on Monday upgraded Lumentum stock and Coherent on views that Nvidia's plans are not as big a threat as imagined.
Raymond James analyst Simon Leopold upgraded Coherent stock and Lumentum to "strong buy" from outperform.
"We believe concerns over co-packaged optics (CPO) are overblown, which has pressured the stocks," he said in a report.
Both Lumentum and Coherent make optical circuit switches called transceivers for AI data centers.
At Nvidia's GTC conference last week, the chipmaker laid out plans for how CPO will be used to connect computer servers using its upcoming AI accelerator chips. A key advantage of CPO is reducing power consumption.
One view on Wall Street has been that CPO devices could reduce Ethernet networking demand for optical transceivers, analysts say. Data center transceiver makers include Applied Optoelectronics, Coherent and Lumentum.
Makers of CPO devices are expected to include Nvidia as well as companies such as Broadcom, Cisco Systems and Marvell Technology.
Lumentum Stock: Optical Industry Trade Show
CPO is also expected to be a big topic at the Optical Fiber Conference (OFC) in San Francisco, which starts March 30.
"With Coherent and Lumentum stocks under pressure into the OFC trade show this year, we anticipate greater clarity on CPO and the market opportunity overall could provide a positive catalyst," Leopold said.
AAOI stock has tumbled 42% in 2025, COHR stock has declined 21% and Lumentum stock has retreated 14%
Meanwhile, Nvidia stock has declined 10% in 2025. Here's a look at Nvidia's GTC conference.
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IBD offers a broad range of growth stock lists. Amid market volatility, here are some useful strategies. Meanwhile, IBD doesn't put much weight on P/E ratios and other valuation metrics. On the other hand, here are some time-tested trading rules.
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