The Optics Trade Is Digesting

Gaetano · Gaetano · May 29, 2026 at 11:03 · ⏱ 2 min read  | Read on Substack ↗
Summary
Optics stocks are consolidating after a run to all-time highs two weeks ago, and the author views this as a healthy digestion rather than a weakening thesis. A Rosenblatt piece reframes the trade from momentum to a supply-chain bottleneck in InP lasers, CPO timing, and testing constraints, which could re-energize interest in the group. For markets, this means optics names like COHR, AAOI, and VIAV may see renewed buying if the reframed narrative gains traction.
  • •Optics names are 10-15% off their all-time highs, which were hit just two weeks ago.
  • •The author describes a recurring pattern: base for about a month, then breakout, then repeat.
  • •A Rosenblatt research note reframes the optics trade from a simple momentum play to a supply-chain capacity problem involving InP lasers, CPO timing, and testing constraints.
  • •Author leans toward a consolidation and eventual upside breakout, stating the difference between a trade cooling off and the underlying setup weakening is key.
Read time 2 min
Length 2,042 chars
Category finance
Trade Ideas
Gaetano Substack author, Gaetano
Author explicitly names COHR as relevant to the Rosenblatt reframing of optics as a supply-chain bottleneck (InP lasers, CPO, testing). The article's bullish bias on the consolidation/breakout pattern
Author explicitly names COHR as relevant to the Rosenblatt reframing of optics as a supply-chain bottleneck (InP lasers, CPO, testing). The article's bullish bias on the consolidation/breakout pattern supports a positive watch. Risk: Continued rotation away from optics if other AI pockets remain favored; execution risk on CPO scaling.
COHR
Gaetano Substack author, Gaetano
Author explicitly names VIAV as relevant to the Rosenblatt piece, which highlights testing constraints as part of the optical supply-chain bottleneck. Testing demand could be a catalyst as data center
Author explicitly names VIAV as relevant to the Rosenblatt piece, which highlights testing constraints as part of the optical supply-chain bottleneck. Testing demand could be a catalyst as data center optical layers expand. Risk: VIAV's optical testing segment is cyclical; slower-than-expected data center buildout could dampen demand.
VIAV
Gaetano Substack author, Gaetano
Author explicitly names AAOI as a focus of the Rosenblatt analysis, tying it to the supply-chain capacity theme. The author's leaning toward an upside breakout implies potential for renewed upside.
Author explicitly names AAOI as a focus of the Rosenblatt analysis, tying it to the supply-chain capacity theme. The author's leaning toward an upside breakout implies potential for renewed upside. Risk: Customer concentration and reliance on 400G/800G transceiver demand; competition from larger players.
AAOI
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This newsletter, published May 29, 2026, features Gaetano discussing COHR, VIAV, AAOI. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Gaetano  · Tickers: COHR, VIAV, AAOI