Enterprise
Lumentum: Strong Data Center Tailwinds, Telecom Headwinds
It’s no secret that Big Tech is investing tens of billions in expanding and building physical data center infrastructure over the next five to ten years – just in May, AWS, Google and Microsoft announced tens of billions in investments to expand data center infrastructure globally. These continuous investments in physical infrastructure will not only require GPUs, but also other networking and optical components. Lumentum’s management has been bullish on the data center optical component market for some time, saying in August 2023 that the “data center optical component market is projected to grow sharply over the next 4 to 5 years to accommodate the increased traffic associated with AI as customers employ ever higher bandwidth interconnects between racks within racks in between servers and storage. We also believe that Datacom VCSEL growth will be meaningful in the next several years as copper is replaced by short-reach multimode optical links.”
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