Home / Themes / AI '25: Interconnects
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Theme thesis · 3/5 sections · Tickers 13 with notes · 6 pending
Bull / Bear Details has the investment thesis and bull/bear points. Overview is monitoring guidance (hiring, forums, second-order trends, search keywords, Google Trends, datasets).
Artificial intelligence infrastructure requires increasingly sophisticated optical and electrical interconnect technologies to move data between accelerators, p
Artificial intelligence infrastructure requires increasingly sophisticated optical and electrical interconnect technologies to move data between accelerators, processors, memory, servers, racks, and data centers. Larger AI clusters, higher bandwidth requirements, and increasing power constraints drive demand for advanced optical transceivers, silicon photonics, high-speed copper connectivity, signal-conditioning semiconductors, cables, connectors, and fiber infrastructure. Suppliers across the interconnect value chain can benefit from increasing data transmission complexity and rising connectivity content per AI system, although technology transitions, customer concentration, competitive pricing, and capital spending cycles create risks.
AI Cluster Scaling Increases Interconnect Demand: Larger accelerator clusters and increasing model complexity require faster, more numerous, and lower-latency connections between processors, memory, servers, and network infrastructure, supporting demand for advanced connectivity components.
Optical Technology Transitions Expand Supplier Opportunities: Migration toward 800G, 1.6T, silicon photonics, and emerging co-packaged optics increases demand for sophisticated optical DSPs, lasers, transceivers, precision components, and photonic integration technologies.
Electrical Connectivity Complexity Raises Semiconductor and Connector Content: Higher SerDes speeds, accelerator density, longer copper reach requirements, and more demanding signal integrity constraints create opportunities for retimers, active electrical cables, advanced connectors, and specialized interconnect semiconductors.
AI Infrastructure Spending Could Slow: Hyperscaler capital expenditure reductions, excessive capacity deployment, financing constraints, or disappointing AI monetization could weaken orders across the optical and electrical connectivity supply chain.
Technology Transitions Could Disrupt Existing Suppliers: Rapid migration between copper, pluggable optics, silicon photonics, co-packaged optics, and alternative interconnect architectures could reduce demand for existing products and require costly engineering investment.
Customer Concentration and Geopolitical Risks Threaten Returns: Dependence on large hyperscale customers, manufacturing concentration, potential trade restrictions, pricing competition, and export controls could disrupt sales, squeeze margins, or alter global supply chain relationships.
Hyperscaler rack-level teardowns, PCIe 6.0/7.0 retimer thermal performance, CXL memory expansion implementations, and high-density copper cabling reach challenges
Field reliability of 800G/1.6T optical transceivers, active electrical cable failure rates, and enterprise/cloud migration from InfiniBand to Ethernet fabrics
Silicon photonics packaging yields, Indium Phosphide substrate availability, co-packaged optics timeline viability, and SerDes physical layer tapeouts
Foundry advanced packaging roadmap execution (CoWoS, NPO, CPO), optical engine wafer-level testing, and merchant DSP versus ASIC integration dynamics
Supply chain channel checks for Asian transceiver ODMs (InnoLight, Eoptolink), bill-of-materials pricing pressure, and North American hyperscaler allocation shifts
Matched (medium)dell_oro_group_market_forecasts_technology_adoption · access=file · map_only
Metric/field Total Hyperscale Cloud Provider Capital Expenditure
Cadence quarterly
Why it matters Directly indicates investment levels by primary customers (hyperscalers) in AI infrastructure, driving demand for interconnect components.
Signal to watch Rising CapEx is bullish.
Confidence: high
Matched (medium)semi_semiconductor_equipment_billings · access=file · map_only
Metric/field Worldwide Semiconductor Sales (3-month moving average, in USD billions)
Cadence monthly
Why it matters Broad indicator of overall semiconductor industry health, foundational for component demand across the theme.
Signal to watch Rising sales are bullish.
Confidence: high
Matchedfred · access=api · map_only
Metric/field DGS10 (Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis)
Cadence monthly
Why it matters Sustained increases in the 10-Year Treasury Yield raise the cost of capital for infrastructure projects and can negatively impact valuations for growth stocks.
Signal to watch Declining or stable yields are bullish.
Confidence: high
Not in registryaccess=scrape
Metric/field China Industrial Production
Cadence monthly
Why it matters China is a significant manufacturing hub and market for several theme constituents. Strong industrial production indicates healthy demand and manufacturing activity.
Signal to watch Rising production is bullish.
Confidence: high
Not in registry
Metric/field IPN31-33AS (Manufacturing Output, NAICS 31-33)
Cadence monthly
Why it matters Reflects the overall health of the manufacturing sector in the US, impacting demand for components and equipment used in data center infrastructure buildouts.
Signal to watch Rising production is bullish.
Confidence: high
Not in registry
Metric/field Relative Search Interest Index for 'AI data center'
Cadence weekly
Why it matters Reflects general public and industry interest in the core demand drivers for AI infrastructure, signaling potential future investment.
Signal to watch Rising search interest is bullish.
Confidence: medium
Not in registryaccess=api
Metric/field Award Amount for NAICS 518210 (Data Processing, Hosting, and Related Services) or 237130 (Power and Communication Line and Related Structures Construction)
Cadence daily
Why it matters Government investment in data center infrastructure or related services can indicate broader market trends and direct opportunities for theme constituents.
Signal to watch Increasing award amounts are bullish.
Confidence: high
Not in registry
Metric/field Stars, Forks, and Commits for 'AI infrastructure' or 'CXL' related repositories
Cadence daily
Why it matters Increased developer activity and interest in AI infrastructure and CXL technologies can be a leading indicator for future hardware demand.
Signal to watch Rising stars, forks, and commits are bullish.
Confidence: medium
Matched (medium)engine_advertising_brand_tracking · access=file · map_only
Metric/field Number of job postings for 'optical engineer', 'data center architect', 'AI infrastructure engineer'
Cadence weekly
Why it matters Hiring trends by major AI/cloud players directly reflect their investment and expansion plans in AI infrastructure.
Signal to watch Increasing job postings are bullish.
Confidence: medium
Not in registry
Metric/field Mentions of 'data center expansion', 'AI infrastructure investment', or 'capital expenditure' in 8-K filings of major hyperscalers (e.g., GOOG, MSFT, AMZN, META)
Cadence event_driven
Why it matters Significant announcements regarding infrastructure investments or strategic partnerships by key customers can signal future demand for interconnects.
Signal to watch Positive announcements are bullish.
Confidence: high
Matchedlightcounting_optical_component_shipments_market_share · access=file · map_only
Metric/field Global 800G/1.6T Optical Transceiver Shipments (Units) and Revenue (USD)
Cadence irregular
Why it matters Directly measures the demand and adoption rates for the core high-speed optical products of the AI connectivity theme.
Signal to watch Rising shipments and revenue are bullish.
Confidence: high
Matched (medium)dell_oro_group_network_equipment_market_share · access=file · map_only
Metric/field Global High-Speed Data Center Ethernet Switch Port Shipments (800G and above)
Cadence quarterly
Why it matters Tracks the adoption of high-speed networking equipment essential for scaling AI clusters, directly impacting demand for interconnects.
Signal to watch Rising port shipments are bullish.
Confidence: high
Matchedsourceability_component_pricing_lead_times · access=file · map_only
Metric/field Average Lead Times and Pricing for Optical DSPs, Lasers (e.g., EML, CW), and HBM Memory
Cadence weekly
Why it matters Provides real-time insights into supply chain health and potential constraints for critical components, impacting production and revenue for theme constituents.
Signal to watch Decreasing lead times and stable pricing are bullish.
Confidence: high
Matchedyole_group_semiconductor_component_market_forecasts · access=file · map_only
Metric/field Co-Packaged Optics (CPO) and Near-Packaged Optics (NPO) Market Forecast and Adoption Rates
Cadence irregular
Why it matters Tracks the adoption and market size of next-generation optical interconnect architectures, which are key growth drivers for several companies in the theme.
Signal to watch Accelerated adoption and increased market size are bullish.
Confidence: high
Matchedtrendforce_supply_demand_industry_forecasts · access=file · map_only
Metric/field HBM (High Bandwidth Memory) Average Selling Price (ASP) and Supply/Demand Outlook
Cadence monthly
Why it matters HBM is a critical component for AI accelerators; its pricing and availability impact the overall cost and deployment of AI infrastructure, influencing interconnect demand.
Signal to watch Stable or declining ASPs and increasing supply are bullish for AI infrastructure buildouts.
Confidence: high
Not in registryaccess=api
Market https://kalshi.com/markets/kxdatacentcon
Why it matters Increased private data center construction spending in the US directly indicates higher demand for the optical and electrical interconnect technologies provided by companies within the AI '25: Interconnects theme. This spending fuels orders for high-speed transceivers, cables, and semiconductor components.
Series key kalshi_us_datacenter_construction_spending
Not in registryaccess=api
Market https://kalshi.com/markets/kxmoratoriumcount
Why it matters Data center moratoriums directly impact the pace and scale of AI infrastructure buildouts, which is a primary driver for the AI '25: Interconnects theme. A higher number of moratoriums could slow demand for interconnect components and negatively affect the revenue growth of theme constituents.
Series key kalshi_datacenter_moratoriums_2026
Not in registryaccess=api
Market https://kalshi.com/markets/kxcoppercable
Why it matters Insulated copper cables are a critical component for electrical interconnects in AI data centers, supplied by several theme constituents (e.g., Amphenol, TE Connectivity, Credo). Section 232 restrictions could lead to increased costs, supply chain disruptions, or shifts in sourcing strategies, impacting the profitability and operational efficiency of these companies.
Series key kalshi_copper_cable_section_232
| Catalyst ID | Estimated Timing | Estimated Date Start | Estimated Date End | Catalyst | Why It Matters | Ticker Or Theme Specific | Transcript Date | Source Type | Catalyst Source |
|---|---|---|---|---|---|---|---|---|---|
| CRDO_31a1f6b9 | OCP in October | 2026-10-01 | 2026-10-31 | Demonstration of Active LED Cable (ALC) solutions at the OCP Global Summit. | Publicly showcases a new product category that is expected to drive initial revenue in fiscal 2028, indicating future growth drivers and TAM expansion for Credo. | Ticker | 2026-09-01 | earnings_transcript | CRDO (ticker) |
| ALAB_69996231 | by year-end | 2026-10-01 | 2026-12-31 | Astera Labs expects to ship Scorpio X-Series high-radix AI fabric switches to additional customers by year-end 2026. | This demonstrates expanding customer diversification and continued traction for their key AI fabric solution, supporting sustained revenue growth beyond the initial lead customer. | Ticker | 2026-08-04 | earnings_transcript | ALAB (ticker) |
| AAOI_e11e5db2 | by the end of this year | 2026-10-01 | 2026-12-31 | Planned capacity milestone to be capable of producing over 500,000 pieces per month of 800G and 1.6T products (management target for end‑of‑year 2026). | Hitting >500k units/month would remove a key supply constraint, enabling the company to convert demand into revenue at scale and supporting the $1B+ revenue and profitability targets; missing this would keep growth capacity‑limited and pressure guidance credibility. | Ticker | 2026-02-26 | earnings_transcript | AAOI (ticker) |
| AAOI_9fd9d6e7 | later this year | 2026-06-01 | 2026-12-31 | 1.6 terabit transceivers begin to contribute to revenue (management said 1.6T products are on track to start contributing later in 2026). | 1.6T is described as a higher‑margin, strategic next‑gen product; early contribution would improve gross margins and long‑term ASPs, while delays would push margin expansion and the multi‑year growth thesis out further. | Ticker | 2026-02-26 | earnings_transcript | AAOI (ticker) |
| AVGO_d6960b6c | Q4 2026 | 2026-09-01 | 2026-11-30 | Ramp up of high-volume shipments of TPU version 8i to Google, accelerated shipments of Ironwood to Anthropic, continued shipments of Jalapeno for OpenAI, and production shipments of Meta's custom MTIA accelerator. | These deployments are expected to drive Q4 AI revenue to $21.7 billion, up 236% year-on-year, demonstrating strong execution and demand in their key AI semiconductor business. | Ticker | 2026-09-02 | earnings_transcript | AVGO (ticker) |
| AVGO_3121e94d | production late 2026 | 2026-10-01 | 2026-12-31 | Broadcom beginning production of silicon for OpenAI's AI accelerators. | This marks a significant milestone in Broadcom's partnership with OpenAI, a major AI frontier lab, and is crucial for its projected AI semiconductor revenue growth in 2027 and beyond. | Ticker | 2026-06-03 | earnings_transcript | AVGO (ticker) |
| AVGO_f8456d4a | delivery in late 2026 | 2026-10-01 | 2026-12-31 | Execution and delivery of an $11 billion order of TPU 'ironwood' racks to Anthropic (management stated the $11B order is for delivery in late 2026). | Successful on-time delivery drives revenue recognition, backlog conversion and AI semiconductor/networks revenue in 2026; delays, cancellations or supply constraints would reduce near-term revenue and could worsen concentration risk and investor sentiment. | Ticker | 2025-12-11 | earnings_transcript | AVGO (ticker) |
| AVGO_98b78f53 | delivery in late 2026 | 2026-10-01 | 2026-12-31 | Delivery and execution of a $1 billion order from Broadcom's fifth XPU (customer accelerator) customer, noted as for delivery in late 2026. | Adds to AI backlog conversion and customer diversification; on-time execution supports FY2026 revenue and cementing design-win momentum, while delays or cancellations would reduce expected AI revenue and weaken investor confidence in broadening customer base. | Ticker | 2025-12-11 | earnings_transcript | AVGO (ticker) |
| AVGO_c6986cdd | for 2026 through 2028 | 2026-01-01 | 2028-12-31 | Broadcom has fully secured capacity for leading-edge wafers, high-bandwidth memory and substrates for 2026–2028. | Mitigates supply constraints risk and provides visibility into delivery timelines and backlog, supporting investor confidence in growth trajectory. | Ticker | 2026-03-04 | earnings_transcript | AVGO (ticker) |
| LITE_10285475 | by the December quarter of 2026 | 2026-10-01 | 2026-12-31 | Lumentum is on track to achieve more than 50% growth in EML units compared to the December quarter of 2025. | This indicates strong execution in a high-demand, high-margin product area, addressing supply-demand imbalance and driving overall revenue and profitability. | Ticker | 2026-05-05 | earnings_transcript | LITE (ticker) |
| MTSI_464533a4 | over the next month or 2 | 2026-09-05 | 2026-11-05 | Receipt of one of the largest orders in MACOM's European Semiconductor Center (MESC) history from a U.K. defense company for airborne defense systems. | This significant order would demonstrate strong traction and market penetration in the European defense market, contributing directly to future revenue growth for the MESC facility. | Ticker | 2026-08-06 | earnings_transcript | MTSI (ticker) |
| TEL_555b7111 | by the end of this calendar year | 2026-10-01 | 2026-12-31 | Completion of the acquisition of Astrodyne TDI. | This bolt-on acquisition broadens TE Connectivity's portfolio of power and filter products, is expected to be accretive to growth rates and margins for both TE and the Industrial segment, and expands TAM in custom power solutions for semiconductor equipment, defense, and medical markets. | Ticker | 2026-07-22 | earnings_transcript | TEL (ticker) |
| AVGO_539a5499 | fiscal year 27 | 2026-11-01 | 2027-10-31 | Broadcom's actual AI semiconductor revenue for fiscal year 2027 compared to its reiterated guidance of 'in excess of $100 billion'. | This ambitious long-term target is a major driver of Broadcom's valuation. Achieving or exceeding it would be a significant bullish catalyst, while any shortfall could materially impact investor sentiment. | Ticker | 2026-06-03 | earnings_transcript | AVGO (ticker) |
| AVGO_2a830b86 | 2027 through 2029 | 2027-01-01 | 2029-12-31 | Execution of the multi‑year alignment/agreement with OpenAI to support ~10 gigawatts of capacity across the 2027–2029 timeframe (management referenced the 10 GW alignment running through '27–'29). | If executed as anticipated, this multi-year power/build program could represent a material multi-year demand stream for Broadcom systems/components; if it under‑delivers or is delayed, expected medium-term revenue and visibility into large hyperscaler demand would be impaired. | Ticker | 2025-12-11 | earnings_transcript | AVGO (ticker) |
| AVGO_bfe6a053 | in excess of $100 billion in 2027 | 2027-01-01 | 2027-12-31 | Broadcom management stated line-of-sight to AI revenue from chips, just chips, exceeding $100 billion in 2027. | If realized, it represents a multi-year, high-scale AI compute monetization that could meaningfully lift revenue and inform valuation, though it may pressure margins if AI mix grows faster than mix shifts in other segments. | Ticker | 2026-03-04 | earnings_transcript | AVGO (ticker) |
| AVGO_6fd62a9a | in 2027 | 2027-01-01 | 2027-12-31 | OpenAI deploying in volume their first-generation XPU in 2027 at over 1 gigawatt of compute capacity. | OpenAI demand is a key driver for Broadcom's XPUs; a meaningful ramp would support backlog realization and top-line growth, though execution risk and timing remain uncertain. | Ticker | 2026-03-04 | earnings_transcript | AVGO (ticker) |
| AVGO_ed84ae9b | in 2027 | 2027-01-01 | 2027-12-31 | Next-generation Tomahawk 7 switch featuring 2x the performance. | Higher bandwidth networking leadership supports AI compute expansion and could accelerate share gains in AI networking. | Ticker | 2026-03-04 | earnings_transcript | AVGO (ticker) |
| FN_f44b4b06 | by early 27 | 2027-01-01 | 2027-03-31 | Fabrinet expects to complete Building 10 at its Chonburi campus, adding a total of 2 million square feet to its manufacturing footprint. | This significant capacity expansion is crucial for supporting strong customer growth and new program ramps, potentially adding $3 billion to $3.5 billion in revenue capacity. | Ticker | 2026-08-17 | earnings_transcript | FN (ticker) |
| LITE_7743904f | sometime in early '27 that we cross over and be the #1 supplier and actually have momentum from there in terms of our OCS shipments. | 2027-01-01 | 2027-03-31 | Lumentum to become the #1 supplier of Optical Circuit Switches (OCS). | Achieving market leadership in OCS signifies strong execution and competitive advantage in a high-growth, strategic product area, driving increased revenue and market share for Lumentum. | Ticker | 2026-08-11 | earnings_transcript | LITE (ticker) |
| LITE_704d1f6d | the third quarter is when you'd see the first triple digit quarter for ultra-high powered lasers. | 2027-01-01 | 2027-03-31 | Lumentum to achieve its first triple-digit revenue quarter for ultra-high-powered lasers. | This milestone indicates a significant ramp-up in demand and shipments for critical components in AI infrastructure, driving substantial revenue growth for Lumentum. | Ticker | 2026-08-11 | earnings_transcript | LITE (ticker) |
| LITE_8cbb5e02 | We'll come out with some new financial targets, probably at the next OFC. | 2027-03-01 | 2027-03-31 | Lumentum to release new financial targets. | The release of new financial targets would reflect Lumentum's updated outlook on stronger demand and improved margins, potentially leading to a re-rating of the stock. | Ticker | 2026-08-11 | earnings_transcript | LITE (ticker) |
| CRDO_e7769009 | beginning in fiscal 28 | 2027-04-01 | 2027-06-30 | Initial revenue recognition for OmniConnect gearbox solutions. | Marks the commercialization of a new product line targeting memory fan-out issues in AI inference, representing a significant content opportunity per GPU and a new growth engine for Credo. | Ticker | 2026-09-01 | earnings_transcript | CRDO (ticker) |
| CRDO_c3f425ee | production ramps for both ALC and OmniConnect solutions beginning in our fiscal 28 | 2027-05-01 | 2028-04-30 | The commencement of production ramps and associated revenue generation for Credo's Active LED Cables (ALC) and OmniConnect gearbox solutions. | These new product categories represent significant TAM expansion and diversification beyond AECs and traditional optical components, critical for sustained long-term growth. | Ticker | 2026-06-01 | earnings_transcript | CRDO (ticker) |
| CRDO_133a8b45 | expected in our fiscal 28 | 2027-05-01 | 2028-04-30 | Credo's recognition of initial revenue from its Co-Packaged Optics (CPO) and Near-Packaged Optics (NPO) designs, leveraging the acquired Dust Photonics SiPho technology. | This marks Credo's entry into advanced optical packaging architectures, crucial for long-term growth and competitive positioning in next-generation AI infrastructure. | Ticker | 2026-06-01 | earnings_transcript | CRDO (ticker) |
| CRDO_af168dde | fiscal '28 | 2027-05-01 | 2028-04-30 | Production ramp for Credo's first OmniConnect gearbox. | OmniConnect addresses the memory-to-compute interconnect, representing another multibillion-dollar TAM expansion, and its production ramp will unlock new revenue streams in AI infrastructure. | Ticker | 2026-03-02 | earnings_transcript | CRDO (ticker) |
| AVGO_c74214d3 | in 2028 | 2028-01-01 | 2028-12-31 | Next-step upgrade to 400G SerDes in 2028. | 400G SerDes upgrade enables higher bandwidth within data-center clusters; could influence ASPs, mix and gross margins during the transition period. | Ticker | 2026-03-04 | earnings_transcript | AVGO (ticker) |
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