Invesaro publishes investment theses and settles them against the market in public: with a date, a basket of companies and a verdict.

Investment thesis

The AI bottleneck moves from chips to the network: all that 1.6 Tb/s of bandwidth hangs on a handful of InP laser makers

LivePublished August 7, 2026180-day horizontechnology

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In short

What is happening
Step-change growth in AI clusters
Why it matters
The AI boom is shifting the bottleneck from silicon to the network: 1.6 Tb/s modules rest on indium phosphide EML lasers, made by a handful of companies.
Who benefits
Coherent Corp, Lumentum Holdings, Fabrinet
What must hold
Assumptions are statements that must stay true for the thesis to make sense.
Assumptions: 5. See the assumptions
When is the verdict
The horizon is the time we give a thesis. That many days after publication we settle it: we compare the basket of companies with the market benchmark and give a verdict.
February 3, 2027, 180 days after publication
Our score at publication
A score from 0 to 100 given on the day of publication, before the market has verified anything. On the results page we check in public whether higher-scored theses do better.
63 out of 100

Basket return

-9.3%

equal weight, since publication

The market over the same window

-2.3%

benchmark for this basket

Edge over the market

-7.1%

in percentage points

Companies in the basket

COHRCoherent Corp LITELumentum Holdings FNFabrinet

The argument

Each new generation of AI training clusters increases not so much the number of processors as the density of the links between them. Scale-up and scale-out topologies mean that a single GPU today comes with a dozen-plus optical links, and eventually several dozen. It is the network, not the silicon itself, that is becoming the fastest-growing line item in a data center budget, and it is the network that sets the pace of the build-out.

To keep up, the market is moving from 400G modules through 800G to 1.6 Tb/s. What matters is not the headline speed but the jump from 100 to 200 gigabits per optical lane. At that rate, cheap directly modulated DFB lasers no longer suffice and you have to reach for externally modulated lasers, i.e. EMLs. Those in turn are grown by epitaxy on indium phosphide (InP) substrates, a process that is technologically far harder and far more capacity-constrained than making ordinary silicon chips.

What this thesis rests on

Each one is a statement that has to be true. We go back to every live thesis on a schedule and check these against public sources, so each leg carries either what we found or the date we look next.

Archive: reviews of this thesis are paused. Last review September 26, 2026.

Coherent's datacom transceiver revenue grows at least 20% year over year in each of the two quarterly reports filed after 7 August 2026.
financial · Supported

A source confirms this · August 27, 2026

Coherent's Q4 FY2026 report (12 August 2026, first of the two reports the claim covers) puts Datacenter & Communications revenue at $1.62bn, up 58.6% year over year, with management citing a 1.6T transceiver ramp; the second report is not yet filed.
See the source
Lumentum's reported gross margin expands by at least 3 percentage points versus its June 2026 quarter in a 10-Q filed before 3 February 2027.
financial · Open
Checked September 26, 2026, nothing published either way
No Chinese or Japanese supplier brings an InP epitaxy line into volume production for 200G-per-lane EML chips before 3 February 2027.
competitive · Open
Checked September 26, 2026, nothing published either way
Nvidia's AI rack platforms shipping through 3 February 2027 keep using pluggable optical modules for the majority of GPU links instead of co-packaged optics.
operational · Open
Checked September 26, 2026, nothing published either way
Fabrinet's optical communications revenue grows at least 15% year over year in every quarterly report filed through 3 February 2027.
operational · Supported

A source confirms this · August 27, 2026

Fabrinet's Q4 FY2026 results (17 August 2026) replace the old optical communications line with three categories: data center revenue $669m, up 68% year over year, and communications infrastructure $413m, up 40% year over year, on total revenue of $1,316m, up 45%.
See the source

Show the causal chain step by step

Step-change growth in AI clusters
Network grows faster than GPU count
Shift to 1.6 Tb/s modules (200G per lane)
Bottleneck: EML lasers from InP epitaxy
Coherent
Lumentum
Fabrinet

This thesis, over time

What has happened since publication. Every entry is computed as of its own date, from price history.

September 26, 2026

Review on day 50: nothing moved

We went back to this thesis on day 50 of 180 and checked each of its 5 assumptions against public sources. No news either way: 5. The equal-weight basket stands at -9.3% since publication day. The benchmark (.INX) returned -2.3% over the same window, so the basket trails its market by 7.1 percentage points. 130 days remain until the verdict.

September 21, 2026

Day 45 of 180: basket -9.3%

The first quarter of the horizon is behind this thesis. The equal-weight basket stands at -9.3% since publication day. The benchmark (S&P 500) returned -2.3% over the same window, so the basket trails its market by 7.1 percentage points. The strongest contributor is LITE (+11.1%), the weakest is FN (-27.1%). 135 days remain until the verdict.

September 11, 2026

Review on day 35: nothing moved

We went back to this thesis on day 35 of 180 and checked each of its 5 assumptions against public sources. No news either way: 5. The equal-weight basket stands at -8.8% since publication day. The benchmark (.INX) returned -2.1% over the same window, so the basket trails its market by 6.7 percentage points. 145 days remain until the verdict.

August 27, 2026

Review: 2 of 5 assumptions confirmed

We went back to this thesis on day 21 of 180 and checked each of its 5 assumptions against public sources. Confirmed by the sources: 2. No news either way: 3. The equal-weight basket stands at -6.8% since publication day. The benchmark (.INX) returned -0.3% over the same window, so the basket trails its market by 6.5 percentage points. 159 days remain until the verdict.

August 19, 2026

Basket fell below -10% since publication

This basket is at -10.5% since publication, 12 days after the thesis was posted. The benchmark (S&P 500) returned -0.5% over the same window, so the basket trails its market by 10.0 percentage points. The strongest contributor is LITE (-0.8%), the weakest is FN (-16.6%). This is not a change of status: the horizon keeps running and the verdict only lands once it expires.

August 18, 2026

Basket crossed +10% since publication

This basket is at +10.3% since publication, 11 days after the thesis was posted. The benchmark (S&P 500) returned -0.2% over the same window, so the basket is ahead of its market by 10.4 percentage points. The strongest contributor is LITE (+15.6%), the weakest is COHR (+5.1%). This is not a change of status: the horizon keeps running and the verdict only lands once it expires.

This is analysis, not investment advice and not a recommendation to buy or sell anything. We publish it and track it in public, mistakes included. Any decision is yours and yours alone.