While artificial intelligence and perhaps quantum computing will be in the spotlight at chip maker Nvidia's GTC conference this week, another technology development will be under the radar. For Nvidia stock as well as companies such as Broadcom, Cisco Systems and Marvell Technology, the development involves emerging data center networking infrastructure to support artificial intelligence.
At the GTC conference, Nvidia is expected to discuss how a new optical technology, co-packaged optics (CPO), will be used to connect computer servers using its upcoming AI accelerator chips. A key advantage of CPO is reducing power consumption.
Makers of CPO devices are expected to include Nvidia, Broadcom, Cisco and Marvell. For Nvidia, the CPO push dovetails with its ramp up of Ethernet networking devices. Ethernet networking devices connect clusters of AI servers in data centers.
Nvidia GTC: Co-Packaged Optics
"At GTC, we'll have our eyes on Nvidia with expectations for CPO options on their new (InfiniBand) switch and Ethernet-based Spectrum switch," said Jefferies analyst Blayne Curtis in a report. "We view these more as proof of concept and expect limited volumes, but Nvidia should use the platform and fervor to emphasize the benefit of their systems-based approach."
On the other hand, CPO devices could reduce networking demand for optical transceivers, analysts say. Transceivers are used in fiber-optic networks for high-speed data communications.
Data center transceiver makers include Applied Optoelectronics, Coherent, and Lumentum Holdings. Shares in Applied Optoelectronics, Coherent and Lumentum have been pressured ahead of the Nvidia GTC conference.
"In terms of optical connectivity, the increasing rack density and rising bandwidth requirements and appetite to deploy larger clusters by customers to leverage scaling of compute should be positive for transceiver suppliers, like Coherent and Fabrinet, as these trends support resilient transceiver ASPs due to the short innovation cycle and the rising per-GPU ratio," said JPMorgan analyst Samik Chatterjee, in a report.
He added: "However, the focus at the GTC event likely will be around the potential discussions and details of development efforts towards CPO. Following months of anxiousness and limited details since the start of the year, expectations generally seem to be for Nvidia to launch CPO starting with switching, before eventually progressing to CPO on the GPU — starting with scale-out networking and then progressing to scale-up networking."
Optical Transceiver Makers Pressured
Further, AAOI stock has tumbled 40% in 2025, COHR stock has declined 32% and LITE stock has retreated 24%
"CPO is not new and faces meaningful technological hurdles," said Raymond James analyst Simon Leopold in a recent report. "CPO may begin to displace some optical transceivers by 2027 or later."
Leopold added: "Vendors with silicon and optical design capabilities are best positioned to deliver CPO, and this group includes Broadcom, Cisco, Marvell and Nvidia."
Meanwhile, Nvida stock has declined 9% in 2025 ahead of the GTC conference. Nvidia's "Rubin" AI accelerator chip is due to ship in 2026-27, coinciding with the CPO networking push.
The data center transceiver market has been robust, said a JPMorgan report.
"The 800 gigabit datacom transceiver market is now on track to expand at a 70% compound annual growth rate from $3 billion in 2024 to $7 billion in 2025 and to $9 billion in 2026," said the JPMorgan report.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
