Rosenblatt Alpha For AAOI / FN / ADTN

Gaetano · Gaetano · August 19, 2026 at 12:03 · ⏱ 5 min read | Read on Substack ↗

Summary

Fabrinet is a long-term winner in the optical/networking buildout because capacity expansion and OCS/NPO/CPO upside offset NVDA share loss, while Adtran's Q2 revenue hole is an anomaly being mispriced by the market as permanent. The broader implication is a 2027 optical/access equipment upgrade cycle benefiting FN, ADTN, Coherent, Lumentum, and Nokia.

•FN capacity is expected to grow from roughly $5.8B today to as much as $9.8B by early 2027, ~69% more capacity and ~85% above the $5.3B revenue run-rate at Q4 exit.
•FN was originally the only manufacturer of NVDA's 400G and 800G transceivers, but NVDA added more suppliers and 800G designs; FN management says this was expected and is replacing it with hyperscaler and merchant programs, including 1.6T later.
•FN's OCS timeline has become more tangible with a ramp over the next 12-18 months; it is shipping to one customer and working with several others, framed as a 2027 growth story in line with COHR and LITE.
•ADTN's CEO personally met with the delayed customer in London and received strong confirmation; funding for the next phase is approved, POs are expected soon, some shipments could begin late this year, with bulk in 2027.
•ADTN management believes ~$850M of Huawei's annual spend in ADTN's addressable categories is still to be displaced over time, plus more than $10B of installed Huawei equipment across Europe is being replaced over years.
•On the Rosenblatt call, European Access is said to be moving toward ADTN + NOK, and ADTN targets $310-$320M quarterly revenue, 42-43% gross margin, 10% operating margin; the CFO called Q2 'largely an anomaly.'

Read time 5 min

Length 5,750 chars

Category finance

Ideas

crux_capital_ Independent Photonics & AI Infrastructure Researcher

Fabrinet remains attractive long-term despite NVDA transceiver share loss and Q1 margin headwinds because capacity is expanding to ~$9.8B, OCS/NPO/CPO optionality should raise the margin ceiling, and

Fabrinet remains attractive long-term despite NVDA transceiver share loss and Q1 margin headwinds because capacity is expanding to ~$9.8B, OCS/NPO/CPO optionality should raise the margin ceiling, and FY27 capex of ~$250M looks rational relative to added revenue capacity.

crux_capital_ Independent Photonics & AI Infrastructure Researcher

Author explicitly says FN's OCS 2027 growth story is 'in line with COHR and LITE,' validating a shared optical components and transceiver upcycle driven by 800G/1.6T and OCS adoption.

Author explicitly says FN's OCS 2027 growth story is 'in line with COHR and LITE,' validating a shared optical components and transceiver upcycle driven by 800G/1.6T and OCS adoption. Risk: Optical sector valuations already reflect much of the 2027 upside; any 1.6T/OCS delay could hit the group.

crux_capital_ Independent Photonics & AI Infrastructure Researcher

The delayed customer was confirmed by the CEO in London, funding for the next phase is approved, POs are expected soon, and the CFO called Q2 'largely an anomaly' — the market may be mispricing a temp

The delayed customer was confirmed by the CEO in London, funding for the next phase is approved, POs are expected soon, and the CFO called Q2 'largely an anomaly' — the market may be mispricing a temporary revenue gap as the new standard. Risk: Visibility on exact PO timing and 42-43% gross margin recovery remains uncertain; Q2-style volatility could persist if approvals slip.

crux_capital_ Independent Photonics & AI Infrastructure Researcher

Author specifically links FN's 2027 OCS growth story to COHR and LITE, implying Lumentum participates in the same optical transceiver/OCS demand wave.

Author specifically links FN's 2027 OCS growth story to COHR and LITE, implying Lumentum participates in the same optical transceiver/OCS demand wave. Risk: Customer concentration in optical communications and timing of 1.6T ramps could create near-term earnings volatility.

crux_capital_ Independent Photonics & AI Infrastructure Researcher

The Rosenblatt call reportedly said European Access is moving toward 'ADTN + NOK,' positioning Nokia as a Western alternative as carriers displace Huawei equipment across Europe.

The Rosenblatt call reportedly said European Access is moving toward 'ADTN + NOK,' positioning Nokia as a Western alternative as carriers displace Huawei equipment across Europe. Risk: Competitive dynamics vary by country and carrier; Huawei replacement timelines could extend beyond current expectations.

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Speakers: crux_capital_ · Tickers: FN, COHR, ADTN, LITE, NOK