Photonics ETFs: The Next Big AI Infrastructure Opportunity?

Photonics is one of the “picks and shovels” AI infrastructure stories that has had a monster run in 2026. Investors can now gain exposure to a diversified basket of global photonics stocks through ETFs.

What Is Photonics?

Photonics is the science of using light to transmit, process and detect information. Researchers are now working to transform the tiny interconnects that allow individual chips to communicate. These connections currently rely on copper wiring, which transmits data using electrons. Optical fiber uses photons instead, making these interconnects more energy efficient and effective.

In simple terms, photons are much more efficient at moving data than electrons. Photonics is playing an increasingly important role in artificial intelligence, cloud computing, telecommunications, defense, health care and advanced manufacturing.

How Big Is the Investment Opportunity?

The biggest investment opportunity comes from AI data centers. Training and running AI models requires huge amounts of data to move quickly between chips, servers and data centers. As AI data centers expand to include hundreds of thousands of accelerators, traditional copper connections become less efficient as data volumes and speeds increase.

Photonics companies could also benefit from several other long-term trends. Lasers and optical sensors are used in autonomous vehicles, smartphones, industrial automation, medical equipment, aerospace and defense systems.

Goldman Sachs projects that the total addressable market for optical networking will grow more than ninefold from 2026 through 2028, rising from roughly $15 billion to $154 billion.

Photonics Stocks in Focus

NVIDIA (NVDA) has invested $2 billion each in photonics companies Lumentum Holdings (LITE) and Coherent (COHR). The AI giant also took a $2 billion stake in Marvell Technology (MRVL) to collaborate on the development of silicon photonics and other technologies.

Marvell has skyrocketed 183% this year, while Lumentum and Coherent are up 132% and 54%, respectively. In many cases, valuations now look stretched. Further, photonics stocks can be volatile. Many of these companies are small, depend heavily on a few large customers and operate in highly competitive markets. 

Photonics ETFs to Consider

An ETF may be a better option for investors who want broader exposure without taking on the risks associated with owning a single photonics stock.

The Corgi Lithography & Semiconductor Photonics ETF (EUV) invests across the photonics value chain. Taiwan Semiconductor (TSM) and ASML (ASML) are its top holdings.

The Roundhill Photonics & Optics ETF (LYTE) offers more global exposure, with China accounting for almost 50% of its portfolio. The Tema Photonics & Optical ETF (LAZR) includes a small position in Anthropic through a special purpose vehicle.

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This article originally published on Zacks Investment Research (zacks.com).

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