You Need to Read This - 12 Ways to Play OCS

Gaetano · Gaetano · May 10, 2026 at 22:52 · ⏱ 10 min read  | Read on Substack ↗
Summary
Optical circuit switching (OCS) is emerging as a major growth engine in optical networking, driven by massive demand signals from Lumentum, Coherent, and Huber+Suhner, and validated by Google's proven production architecture. For markets, this points to a new supply chain opportunity with substantial revenue ramps, particularly for OCS system vendors and their component suppliers.
  • •Lumentum has a multi-year, multi-billion-dollar OCS purchase agreement and a backlog exceeding $400 million, with ~$400 million in shipments planned for H2 2026.
  • •Coherent doubled its OCS market opportunity estimate to over $4 billion and resolved an internal production bottleneck, enabling simultaneous ramp across two facilities.
  • •Huber+Suhner received major orders from a hyperscaler for its Polatis OCS, driving a 21.9% surge in communication segment order intake to CHF 418.3 million in 2025.
  • •Google's 2022 paper demonstrated that OCS in its Jupiter network delivered 5x higher speed/capacity, 30% lower capex, and 41% lower power, validating the architecture at scale.
  • •OCS keeps data in the optical domain, reducing power, latency, and conversion costs compared to traditional packet-switched networks, with immediate relevance to AI scale-out and scale-across networks.
Read time 10 min
Length 10,468 chars
Category finance
Trade Ideas
Gaetano Substack author, Gaetano
Article details Lumentum's massive OCS backlog ($400M+), a multi-billion-dollar purchase agreement, and CEO Hurlston's confidence that competition is unlikely to ship similar solutions within a year.
Article details Lumentum's massive OCS backlog ($400M+), a multi-billion-dollar purchase agreement, and CEO Hurlston's confidence that competition is unlikely to ship similar solutions within a year. This indicates strong near-term revenue visibility and a competitive moat. Risk: Execution risk on ramping production to meet demand; dependency on a single hyperscaler customer (not explicitly named but implied to be Google).
LITE
Gaetano Substack author, Gaetano
Coherent doubled its OCS market opportunity to $4B+, resolved an internal production bottleneck, and is ramping across two sites. CEO Jim Anderson expects OCS to drive accelerated revenue growth next
Coherent doubled its OCS market opportunity to $4B+, resolved an internal production bottleneck, and is ramping across two sites. CEO Jim Anderson expects OCS to drive accelerated revenue growth next quarter, signaling a healthy demand pipeline. Risk: Technology competition from MEMS-based solutions (Lumentum); potential supply chain constraints as volume scales.
COHR
Gaetano Substack author, Gaetano
Huber+Suhner secured major orders from a hyperscaler for its Polatis OCS, with a multi-year cooperation agreement. Its order intake crossed CHF 1 billion for the first time, and its existing Poland fa
Huber+Suhner secured major orders from a hyperscaler for its Polatis OCS, with a multi-year cooperation agreement. Its order intake crossed CHF 1 billion for the first time, and its existing Poland facility is at full capacity, necessitating a new site. This confirms strong commercial traction. Risk: Since it is a Swiss-listed company, currency and liquidity considerations apply; also reliant on a single hyperscaler relationship.
HUBR

This newsletter, published May 10, 2026, features Gaetano discussing LITE, COHR, HUBR. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Gaetano  · Tickers: LITE, COHR, HUBR