AAOI, LITE, COHR Extend Sell-Off Overnight: AI Funding Fears Hit Optical Networking Trade, But Retail Bulls Eye Rebound

AI spending concerns rattle optical stocks after strong year-to-date gains amid robust demand for high-speed connectivity.

• AAOI, LITE and COHR fell about 2.5% in overnight trading late Monday.
• Broadcom and Intel CEO comments on AI financing constraints fueled concerns over the sustainability of infrastructure spending.
• Despite the sell-off, retail traders remained bullish on AAOI and COHR.

Optical networking stocks extended their sell-off in overnight trading late Monday, with Applied Optoelectronics (AAOI), Lumentum Holdings (LITE) and Coherent (COHR) each falling about 2.5% after plunging 8%-10% during Monday’s regular session. 

The declines came as concerns about the sustainability of AI infrastructure spending weighed on the sentiment for semiconductor and adjoining industries. Broadcom CEO Hock Tan warned that access to capital could become a bigger constraint on AI expansion than chip shortages, while Intel CEO Lip-Bu Tan highlighted rising borrowing costs and uncertainty over returns on AI investments.

The comments added to investor concerns about whether AI companies can sustain their massive infrastructure spending commitments. Lumentum was the biggest loser in the Nasdaq-100 index on Monday, followed by SanDisk, which fell 6%, amid a broad sell-off in chip stocks. 

Optical Networking Momentum

The sell-off puts the brakes on an otherwise strong rally in optical networking stocks. Applied Optoelectronics, Lumentum and Coherent have been among the biggest beneficiaries of the AI infrastructure boom this year, as hyperscalers invest heavily in data centers and high-speed connectivity to support increasingly demanding AI workloads.

The three companies manufacture optical components and networking products that help transfer data at high speeds. 

Lumentum CEO Michael Hurlston recently said the company’s optical products were sold out through early 2029, underscoring the scale of demand. Meanwhile, Nvidia has invested $2 billion each in Lumentum and Coherent to support optical technology development and manufacturing expansion.  

Retail Traders See Buying Opportunity

Despite the latest declines, retail traders on Stocktwits remained optimistic about a potential rebound. Sentiment around AAOI was ‘extremely bullish,’ while LITE sentiment was ‘bullish.’

“AAOI Opened a new position here, this is cheap. Stock should be over $150+ Demand is crazy and they are sold out,” one trader said.

Another trader wrote, “$LITE oversold. 900 eow,” expressing expectations for a recovery. A third trader remained bullish on Coherent, saying, “$COHR most will regret not following or investing in this stock.” The sentiment for COHR on Stocktwits, however, remained ‘bearish.’ 

Year to date, AAOI is up 189% as of its last close, while LITE has gained 170% and COHR has gained 56%.

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