Nvidia invests $4 billion in photonics firms to secure supply chain for next-generation AI

Nvidia invests $4 billion into photonics firms in a bid to bolster data center interconnect supply chains -- Lumentum and Coherent investment to fund U.S. R&D and manufacturing facilities, supports capacity rights and future access

Nvidia has pledged to invest a combined $4 billion in two photonic manufacturing firms, Lumentum and Coherent. As Reuters reports, this continues Nvidia's plans to expend capital investment with its expansive cash reserves to help build the AI ecosystem and improve the output of its models. The quiet part is that it also helps keep Nvidia on the cutting edge. Both companies develop optical and semiconductor technologies, enabling future networking hardware and AI chip designs that utilize light to transfer data, rather than electricity. With Nvidia looking to continue providing the digital shovels in this AI gold rush, leveraging forward-looking technologies like photonics may be one way it maintains its edge in the range of hardware spaces it now occupies in the global AI buildout. "AI has reinvented computing and is driving the largest computing infrastructure buildout in history," said Nvidia CEO Jensen Huang. "Together with Lumentum, NVIDIA is advancing the world's most sophisticated silicon photonics to build the next generation of gigawatt-scale AI factories." Jim Anderson, CEO of Coherent, spoke on their deal, stating: "This strategic relationship underscores Coherent's role as a key enabler of next-generation AI data center infrastructure. We are proud to expand our 20-year relationship with NVIDIA by increasing their access to include multiple product families to help them build the AI data centers of the future." Cash, access, capacity Nvidia has been working with both of these companies for some time on its own networking hardware and to develop a strong supply chain for these key components. These new deals only enhance that cooperation. As with most of the deals within and without the AI industry over the last year, Nvidia's investment in these firms is a mixture of hard currency, future purchase orders, and secured access to key technologies. With Lumentum, Nvidia's $2 billion investment will support its R&D and manufacturing expansion in the U.S. with a new fabrication facility. It also includes a "multibillion purchase commitment" from Nvidia, and "future capacity access rights for advanced laser components." The Coherent deal reads almost identically. There, Nvidia and Coherant talk up the "multiyear strategic agreement" between the two companies, which includes "an Nvidia multibillion-dollar purchase commitment and future access and capacity rights for advanced laser and optical networking products." In addition, Nvidia will also invest $2 billion to support R&D and fab. expansion for its U.S.-based manufacturing facilities. Considering the number of bottlenecks that have appeared since the memory supply shortage began in 2025, from glass cloth to PCB drill bits, Nvidia's investment in expanding photonics development and fabrication in America may be a way to get ahead of future supply constraints, too. Hedging its bets With the similarities between these two investment vehicles for Nvidia, and the near identical nature of the deals and subsequent press releases, it very much feels like Nvidia is hedging its bets. Arguably, that's what Nvidia has been doing since the advent of this major AI revolution. Nvidia is the one major company making money hand over fist in this new era, and instead of hoarding it, or using it exclusively for stock buybacks, or corporate bonuses, it's been reinvesting in the AI industry that put a rocket up its balance sheets and stock price. It invested in Coreweave, OpenAI, Oracle, Intel, Synopsys, and Nokia, all of which are heavily involved in the AI industry or are adjacent to it. It's keenly aware that even as the king of the AI pile, it needs those other economic and industry pillars to keep the whole house of cards standing. If Nvidia were bold enough, it could try to buy out Lumentum and Coherent entirely. Their company valuations are a fraction of Nvidia's profits from even the past quarter. But it didn't. It secured capacity, but not exclusive rights. Nvidia isn't looking to eat the AI industry and supply chain, but bolster its output. It's not a one horse race As much as Nvidia is the clear market leader when it comes to AI hardware, it is far from the only player in the game. China has used Nvidia's absence to heavily invest and fuel its domestic inference chip industry. AMD recently signed a $60 billion deal with Meta to power its next-generation AI-powering data centers, and there are small startup companies looking to build out ASIC chips that could prove far more powerful for future AI workloads when fully developed. Marvell's Celestial AI acquisition highlights that other companies see optical technologies as a key future technology for next-generation networking hardware. Meanwhile, the Bill Gates-backed Neurophos is developing AI chips that use photonics to accelerate even beyond what the best GPUs can do. Nvidia made itself the king of the AI hill by having the best hardware at the right time, and as far as training goes, that doesn't seem likely to change any time soon. But if Nvidia doesn't keep developing its hardware, other contenders would emerge. And the competition is ramping up in the inference space, leaving no guarantee that Nvidia will retain its premier position forever. Perhaps getting ahead of the pack when it comes to photonics will be one way it can maintain its lead. But even if it doesn't, $4 billion is a drop in the bucket for a company that made close to 20 times that in the past three months alone.

Nvidia burns $4B to light up US photonics manufacturing

Coherent, Lumentum each walk away with $2B in cash and a multi-billion purchase commitment Nvidia is dipping into its war chest once again this week, investing $2 billion each in Coherent and Lumentum to lock in supply of the vendors' respective silicon photonics technologies. The $4 billion investment was announced alongside a pair of nonexclusive multibillion-dollar purchase commitments by the GPU slinger to acquire advanced laser components and optical networking products from the two companies. Both Coherent and Lumentum specialize in optical components, like pluggable transceivers, laser sources, optical circuit switches, and other components used in datacenter optics. In the wake of the AI boom, Nvidia, which acquired Mellanox in 2020, has emerged as one of the largest networking vendors in the world. Nvidia's networking business generated more than $31 billion in revenue in its 2026 fiscal year. While Nvidia has resisted photonics for scale-up NVSwitch fabrics used by its rack-scale compute platforms like the GB200 NVL72, this is largely down to power consumption. According to CEO Jensen Huang, sticking with copper shaved off 20kW of power from the 120kW system. The same can't be said of the scale-out networks used to stitch multiple systems or racks together for distributed AI inference or training. Here the company has embraced silicon photonics as a means of cutting power consumption. In 2025, Nvidia unveiled its next-gen Spectrum and Quantum switches would use co-packaged optics, which integrates optical transceivers directly into the switch. This approach dramatically reduces the number of optics required by eliminating pluggable modules on the switch side, which also cuts power consumption. For the moment, Nvidia is sticking with pluggables on the NIC side of things, and while the optics are now integrated directly into the switch package, its designs still rely on laser modules as their light source. In addition to scale out, Nvidia also needs optics for products like Spectrum-XGS, which are used to distribute workloads across multiple datacenters together at ranges starting at 500 meters. Many companies in the space, including Ayar Labs and Lightmatter, believe that as bandwidth continues to increase, chip designers like Nvidia will eventually be forced to embrace silicon photonics interconnects for scale-up networking as well. Such a design would see fiber optic cables connected directly to each accelerator. In any case, Nvidia's investment in Coherent and Lumentum on Monday highlights just how important these technologies are to the broader AI datacenter supply chain. As part of the announcement, both companies plan to expand their manufacturing capacity in the US. The deal comes just days after OpenAI announced a $110 billion funding round, of which Nvidia would contribute $30 billion. ®

Nvidia to invest $4 billion in two photonics companies

Nvidia has announced it is investing a combined $4 billion in two companies developing photonics technologies. The U.S. chip giant announced on Monday it's investing $2 billion in Lumentum and the same amount in Coherent. Lumentum is a U.S.-based company that is developing optical and photonic technologies to power the networks and infrastructure behind AI, cloud computing and next-generation communications. Coherent, also based in the U.S., develops photonics technology, which refers to harnessing light (photons) to create components and systems that enable high-performance optical applications. "Together with Lumentum, NVIDIA is advancing the world's most sophisticated silicon photonics to build the next generation of gigawatt-scale AI factories," said Jensen Huang, founder and CEO of Nvidia, said in a statement. He added that Nvidia will work with Coherent on developing next-generation silicon photonics for AI infrastructure.

Nvidia invests $4B in co-packaged optics suppliers Lumentum, Coherent - SiliconANGLE

Nvidia invests $4B in co-packaged optics suppliers Lumentum, Coherent Nvidia Corp. today announced plans to invest in Lumentum Holdings Inc. and Coherent Corp., two publicly traded suppliers of optical networking equipment. Each company is set to receive $2 billion. Nvidia stated that the sum includes a "multibillion-dollar purchase commitment and future access" rights to certain laser components. In the case of Coherent, the deal also encompasses other optical networking products. Last March, Nvidia debuted two data center switch families that use an emerging packet transmission technology called co-packaged optics, or CPO. Lumentum and Coherent both make laser components for CPO systems. In September, the former company launched an effort to grow its CPO component production capacity. The servers that make up artificial intelligence clusters are connected by fiber-optic cables. Switches turn packets into light before it's sent through a fiber-optic cable and then turn the light beam back into digital data. Historically, the task was performed by standalone devices called pluggable transceivers. The CPO technology that Nvidia integrated into its switch portfolio last year removes the need for standalone pluggable transceivers. It integrates a pluggable transceiver directly into switches, which reduces the amount of hardware that data center operators must buy. The technology also reduces network power usage. CPO switches use miniature laser emitters to turn data into light that can be transmitted over fiber-optic cables. Lumentum, the first company in which Nvidia has invested, is among the world's top suppliers of CPO-optimized laser modules. Its emitters generates 1311-nanometer light beams and include a temperature management mechanism that helps optimize network performance. Lumentum, which generated $665.5 million in revenue last quarter, also makes other network equipment. It develops traditional pluggable transceivers and devices called optical circuit switches that help optimize AI clusters' network traffic. Additionally, Lumentum supplies industrial lasers geared towards tasks such as welding together metal parts. Coherent also makes a mix of industrial and data center lasers. It recently introduced a laser emitter optimized specifically for CPO systems. It sells the module alongside related equipment such as fiber optic cables. The company is also active in certain adjacent markets. It sells a line of devices that help network equipment suppliers speed up product development initiatives. Its offerings in that category include so-called optical spectrum synthesizers, which engineers can use to simulate different types of data traffic in optical networks. Coherent and Lumentum will use the funding from Nvidia to support research and development efforts. They're also working to expand their stateside manufacturing capacity. The companies' shares jumped more than 10% on the news in today's trading session.

Jensen Huang's $2B bet: NVIDIA locks in laser tech to power AI's future

TL;DR: NVIDIA has committed $2 billion in a multi-year partnership with Lumentum to develop advanced optics technology for next-generation AI systems. This strategic investment aims to enhance data transfer bandwidth in AI factories, addressing performance limits of electrical connections and supporting the future of high-powered AI infrastructure. NVIDIA has announced a new multi-year strategic partnership that will see the company invest $2 billion to help develop next-generation advanced optics technologies designed to power future generations of AI. In a new press release, NVIDIA announced a partnership with Lumentum, a US-based company building a new fabrication plant. The press release states that NVIDIA's investment will include a purchase commitment and future capacity access to advanced laser components, and that its $2 billion investment will support R&D, the capacity access, and general operations. Notably, the agreement is non-exclusive, meaning Lumentum is free to pursue partnerships. Why make a $4 billion bet? NVIDIA is looking to secure the future technology to power AI factories, and that technology is optics. These systems use light instead of traditional electrical signals to move data between chips, servers, etc., and the technology is extremely promising, as it's already proven to offer higher bandwidth than electrical connections, which are already reaching power and performance ceilings. NVIDIA is looking to integrate this technology into its AI factories, which are increasingly bandwidth-intensive as more powerful GPUs are brought online and more sophisticated AI models are created. "AI has reinvented computing and is driving the largest computing infrastructure buildout in history," said Jensen Huang, founder and CEO of NVIDIA. "Together with Lumentum, NVIDIA is advancing the world's most sophisticated silicon photonics to build the next generation of gigawatt-scale AI factories." NVIDIA's CEO, Jensen Huang, has described optics as becoming as critical as GPUs themselves. For NVIDIA, this new partnership is a strategic vertical alignment, as it has now strengthened ties with a leading optics manufacturer, effectively ensuring that data movement scales alongside raw compute power.

Nvidia Pumps $4 Billion Into Laser Tech To Fuel Next AI Supercycle - NVIDIA (NASDAQ:NVDA)

Nvidia Corp. (NASDAQ:NVDA) is doubling down on artificial intelligence infrastructure with a $4 billion investment in optical networking companies and a new push into 6G. Nvidia Invests $4 Billion In Photonics Partners Each agreement includes multibillion-dollar purchase commitments and future capacity access rights for advanced laser and optical networking components. The companies said Nvidia will use the funds to support research and development and to expand future capacity and U.S. manufacturing operations. Lumentum and Coherent develop optical and photonics technologies that generate and transmit light for high-bandwidth, energy-efficient data transfer in AI and cloud computing systems. Indium phosphide lasers -- produced in the U.S. mainly by these two companies -- enable faster data transmission and higher bandwidth connections in data centers. The agreements provide demand visibility for these components and help reduce expansion risk. Nvidia CEO Jensen Huang told CNBC, "Together with Lumentum, Nvidia is advancing the world's most sophisticated silicon photonics to build the next generation of gigawatt-scale AI factories," and added that Nvidia will work with Coherent to develop next-generation silicon photonics for AI infrastructure. Shares of Lumentum and Coherent rose following the announcement, with Lumentum climbing as much as 11% and Coherent reaching a record high in earlier trading. Nvidia Expands Into 6G With Telecom Partners Separately, Nvidia announced Sunday that it is partnering with telecom and technology companies to advance 6G using open, secure, and AI-native network designs. The company said it plans to build future wireless systems around software-based architectures and AI-RAN (artificial intelligence -- radio access network), allowing networks to improve through software updates and embedded intelligence. CEO Jensen Huang said, "AI is redefining computing and driving the largest infrastructure buildout in human history -- and telecommunications is next." NVDA Price Action Semiconductor and major tech stocks continued to slide despite strong earnings from Nvidia, as investors weighed AI profitability concerns, heavy capital spending, macroeconomic pressures, and rising geopolitical tensions in the Middle East. Nvidia shares were down 3.09% at $176.85 during premarket trading on Tuesday, according to Benzinga Pro data. Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Nvidia to invest US$2 billion each in Lumentum, Coherent to bolster AI processors

Nvidia will invest US$2 billion each in photonic product makers Lumentum and Coherent, as it looks to bolster its data center chips with technology that can better cater to the growing need for faster AI processors. Shares of Lumentum and Coherent were up over seven per cent ⁠in premarket trading after the announcement on Monday. At its most recent earnings conference, Nvidia executives said the company would use ⁠its large cash reserve to invest in the AI ecosystem and help boost the output of ⁠models. Light-based and photonics technology has emerged as a popular choice for chipmakers looking to increase the speed of their chips in an effort to cater to ⁠higher ⁠inference requirements. The tie-ups include multibillion-dollar purchase commitments from Nvidia and future capacity ⁠and access rights to advanced laser and optical networking products from both Lumentum and Coherent. The investments will help the ⁠companies support research and development, capacity and operations as they build out U.S. manufacturing capabilities.

Nvidia Pulls Back as $4B Optics Bet Raises Near-Term Return Questions | Investing.com UK

NVIDIA (NASDAQ:NVDA) shares fell sharply in premarket trading Tuesday after the AI chip giant announced separate $2 billion investment agreements with photonics companies Lumentum Holdings (NASDAQ:LITE) and Coherent (NYSE:COHR)., bringing its total outlay to $4 billion. The deals, announced Monday, are structured as multi-year agreements aimed at accelerating advanced optics technologies for next-generation AI infrastructure. While the investments underscore Nvidia's aggressive push to dominate the AI hardware ecosystem, markets responded cautiously, sending shares lower as investors weighed the scale of capital deployment against near-term returns. NVIDIA is investing $2 billion apiece in Lumentum Holdings and Coherent Corp. as part of separate multi-year agreements that include multibillion-dollar purchase commitments and future capacity access rights for advanced laser and optical networking products. The companies noted that optical-connection technologies are considered critical to the next phase of AI infrastructure, enabling ultrahigh-bandwidth, energy-efficient connectivity across AI networks. The deals will fund research and development, expand operational capacity, and support the build-out of U.S. manufacturing facilities, with Lumentum's CEO confirming plans to invest in a new fabrication facility to increase production capacity. The strategic rationale behind the investments reflects Nvidia's broader ambition to extend its lead in the fast-moving AI hardware industry at a time when major cloud providers are increasingly developing custom silicon. Photonics, which uses light rather than electrical signals to create connections between AI chips, has emerged as a key frontier for chipmakers seeking to meet rising inference demands. The move follows a similar industry trend: Marvell Technology previously acquired semiconductor startup Celestial AI in a $3.25 billion deal targeting photonics capabilities. These deals are part of a wider pattern of Nvidia deploying its substantial cash reserves, reported at $62.56 billion, into the AI ecosystem. The company also recently contributed $30 billion to OpenAI's record-breaking $110 billion financing round, alongside $50 billion from Amazon and $30 billion from SoftBank, signaling its commitment to reinforcing demand across the entire AI value chain. NVIDIA shares were trading at $177.21 in premarket as of 4:40 AM EST on Tuesday, March 3, down $5.16 or 2.83% from the prior session's close of $182.48. Monday's close itself had already reflected a degree of caution, with the stock trading in a day range of $174.64 to $183.46. Year-to-date, NVDA is down approximately 2.16%, underperforming the S&P 500's modest gain of 0.53% over the same period, though its one-year return of 46.12% remains well ahead of the broader index's 15.57%. Despite the near-term softness, Nvidia's fundamental picture remains robust. The company posted Q4 FY2026 revenue of $68.13 billion and earnings of $39.55 billion, beating analyst EPS estimates of $1.54 with an actual figure of $1.62. Trailing twelve-month revenue stands at $215.94 billion, with a profit margin of 55.60% and a return on equity of 101.49%. The stock carries a trailing P/E of 37.24 and a forward P/E of 22.83, suggesting the market still prices in significant growth ahead. Analyst sentiment remains broadly positive, with an average 12-month price target of $264.25, representing substantial upside from current premarket levels. JP Morgan maintained its Overweight rating as recently as February 26, raising its price target from $250 to $265. The top analyst rating from Rosenblatt sits at 82 out of 100 with a Buy recommendation, and the analyst consensus skews heavily toward Strong Buy and Buy ratings across December through March tracking periods. *** Looking to start your trading day ahead of the curve?

Coherent stock surges after Nvidia invests $2 billion By Investing.com

Investing.com -- Coherent Corp. (NYSE:COHR) shares rose 10% on Monday after Nvidia (NASDAQ:NVDA) announced a $2 billion investment in the company as part of a multiyear strategic agreement to advance optical technologies for AI data centers. The nonexclusive agreement includes a multibillion-dollar purchase commitment from Nvidia and future access and capacity rights for advanced laser and optical networking products. The investment will support Coherent's research and development, future capacity and operations as the company expands its U.S.-based manufacturing capabilities. Optical interconnects and advanced package integration are foundational to the next phase of AI infrastructure, enabling ultrahigh-bandwidth, energy-efficient connectivity across AI factories. The partnership combines Nvidia's leadership in AI, accelerated computing and networking with Coherent's expertise in optical innovation and advanced manufacturing. "Computing has fundamentally changed. In the age of AI, software runs on intelligence with tokens generated in real time by AI factories for every interaction and every context," said Jensen Huang, founder and CEO of Nvidia. "With Coherent, NVIDIA is pioneering next-generation silicon photonics to enable AI infrastructure at unprecedented scale, speed and energy efficiency." Jim Anderson, CEO of Coherent, commented that the strategic relationship underscores Coherent's role as a key enabler of next-generation AI data center infrastructure. He noted the expansion of the companies' 20-year relationship, which will increase Nvidia's access to multiple product families to help build AI data centers of the future. The agreement positions Coherent to scale its manufacturing capacity to support the global buildout of next-generation AI data centers. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Nvidia to Invest $2 Billion in Both Lumentum and Coherent

Nvidia is investing $2 billion in both Lumentum and Coherent as part of agreements to help accelerate advanced optics technologies for AI infrastructure. The two separate agreements each include a multibillion-dollar purchase commitment from Nvidia and future capacity access rights for advanced laser products. Meanwhile, the investments in each company will support research and development, and future capacity and operations as the two companies build out their U.S. manufacturing capabilities. The companies said that optical-connection technologies are critical to the next phase of AI infrastructure, allowing for ultrahigh-bandwidth, energy-efficient connectivity of AI networks. Lumentum shares rose 7.6% to $754 in premarket trading. Coherent gained 7.3% to $277.73. Write to Nicholas G. Miller at [email protected]