Welcome to the laser photonics industry, one of the most important and underappreciated ways to invest in the artificial intelligence technology boom.
While semiconductor giants tend to grab headlines, the infrastructure enabling AI, specifically high-speed optical networking, precision lasers and photonic chips, is becoming just as critical.
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What Is Laser Photonics Technology, and Why Invest?
Photonics is the science of using light particles called photons instead of electrons, or electricity, to carry data, sense objects or generate power. Laser photonics has developed as a specific branch that uses coherent light, or lasers, to achieve extreme precision.
As electricity has become too slow and too hot to handle the computing needs of artificial intelligence and next-generation semiconductors, laser photonics has shifted from a niche science to the emerging backbone of AI and chipmaking. Instead of sending electrical signals through copper, AI data centers have started to use laser-based transceivers.
How Laser Photonics Breaks Through the “Copper Wall”
Industry growth is being fueled by these big megatrends.
“Laser photonic technology matters a lot right now because AI infrastructure is hitting what some in the industry call the ‘Copper Wall,'” says Dan Buckley, chief analyst at DayTrading.com. “Copper-based electrical connections inside data centers have trouble keeping up with the heat, latency and overall bandwidth requirements that come with training and running massive AI models.”
Lasers that send data through fiber, instead of electrical signals going through copper, “can resolve that bottleneck by delivering more data at lower power consumption,” Buckley notes.
Laser Photonics’ Role in Industrial Operations
But laser photonics’ utility doesn’t stop there. “Laser photonic technologies are playing a critical role in industrial applications, particularly in the measurement of physical properties and chemical composition of crude oil and refined petroleum products,” says Gregory Shahnovsky, CEO at Modcon Systems Ltd., a process analysis and AI-enabled optimization services company for process industries. “By leveraging optical techniques such as absorption spectroscopy and related photonic methods, it becomes possible to obtain real-time, highly accurate insights into product quality directly within the process stream.”
This, Shahnovsky says, has a “direct impact on operational efficiency, product consistency and overall refinery economics.”
On the investment side, the technology’s expanded marketplace makes it an attractive addition to a portfolio in a red-hot industry that doesn’t get much media attention. “The broader investment case for laser photonics is strongly linked to its expanding role in high-value sectors such as energy, semiconductors, advanced manufacturing and environmental monitoring,” Shahnovsky adds.
Overall, the global photonics market is already massive, valued at $836.6 billion in 2025 and projected to reach $1.35 trillion by 2032, growing at a compound annual growth rate of 7.1%, according to Maximize Market Research.
Which laser photonics technology stocks make the grade in 2026? These five stocks could be on any savvy investor’s short list:
| Stock | Year-to-date return* |
| Lumentum Holdings Inc. (ticker: LITE) | 124.3% |
| Coherent Corp. (COHR) | 39.9% |
| IPG Photonics Corp. (IPGP) | 59.1% |
| nLight Inc. (LASR) | 60.3% |
| MACOM Technology Solutions Holdings Inc. (MTSI) | 39.1% |
*As of the April 2 market close.
Lumentum Holdings Inc. (LITE)
At about $827 per share, Lumentum comes at a hefty price, but the stock keeps moving in one direction, and that’s up. LITE shares are far ahead of the Magnificent Seven stocks year to date. Lumentum, which was added to the S&P 500 in the third week of March, continues to outperform and, aside from some profit-taking last week, shows few signs of slowing down.
Why the run-up in price? For starters, Lumentum has become one of the biggest winners in the AI infrastructure buildout. The company produces optical and laser components used in hyperscale data centers, where demand is surging. Its growth has been fueled by major partnerships and investments tied to AI chipmakers.
“Photonics is gaining more mainstream attention because Nvidia Corp. (NVDA) recently invested $2 billion into Lumentum,” Buckley says. “That’s a reasonable clue that optic photonics will have a big part in the next generation of AI infrastructure.”
Some Wall Street analysts believe Lumentum’s share price can go much higher. Karl Ackerman, BNP Paribas technology analyst, has a $1,040 one-year price target on the stock as of late March. After an 8% run-up on April 2, that’s a potential upside of 25.8%.
Coherent Corp. (COHR)
This opto-electronic components and devices company is one of the most diversified players in photonics, spanning telecom, industrial lasers and semiconductor materials.
The Saxonburg, Pennsylvania-based company’s scale, built through the merger of II-VI Inc. and Coherent Inc., gives it broad exposure to multiple growth markets, including AI infrastructure and advanced manufacturing. It’s also a direct beneficiary of increased demand for optical components used in high-speed networking.
“Coherent has approximately 25% market share in optical transceivers and joined the S&P 500 in March,” Buckley notes. “Its strategic partnership with Nvidia (which invested $2 billion in the company) is evidence that it’s positioned as the primary architect of AI optical interconnects. It’s very pricey by traditional metrics like forward price-to-earnings, so it’s more of a longer-term bet.”
Coherent’s deal with Nvidia, inked in early March, allows it to build advanced optics technologies, mainly in manufacturing capacity and research and development. When big tech brand names are handing $2 billion over to work with you, chances are that share-price momentum is going your way.
That’s for good reason, too. “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, when announcing the deal. “With Coherent, Nvidia is pioneering next-generation silicon photonics to enable AI infrastructure at unprecedented scale, speed and energy efficiency.”
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IPG Photonics Corp. (IPGP)
Marlboro, Massachusetts-based IPG Photonics is building a leadership position in fiber laser technology, which is widely used in industrial manufacturing. Analysts are calling IPGP a “picks and shovels” play, as the company’s lasers are essential for precision cutting, welding and materials processing in industries ranging from aerospace to automotive.
Unlike AI-heavy peers, IPG Photonics’ growth is more closely tied to automation, reshoring and electric vehicle production, giving the stock a cyclical yet diversified sheen for investors. The stock is up over 59% in 2026, although IPGP shares have lost some luster, falling 16% in the past month, after a March 16 ruling in Düsseldorf, Germany, against IPG Photonics in an adjustable mode beam (AMB) laser patent infringement case brought by industrial products company Trumpf. The sell-off in IPGP shares isn’t expected to last long, as it affected only AMB laser products sold in Germany, France and Italy, accounting for less than 1% of IPG Photonics’ annual sales.
Sector analysts are largely bullish on IPGP shares, with a consensus price target of $148 per share, representing about 30% potential upside.
nLight Inc. (LASR)
Up 60% year to date, LASR shares have caught fire with investors, who increasingly see nLight as a smaller-cap company with a big future in building high-power semiconductor lasers for defense, aerospace and industrial applications. That exposure to directed-energy weapons and advanced sensing technologies should give nLight leverage via a unique niche within the laser technology sector.
Market analysts say LASR is uniquely positioned to thrive in the global military and defense market, especially as the industry pivots toward high-energy laser systems to more effectively defend against burgeoning drone and missile threats. That’s also the case from an accounting point of view, compared with traditional interceptors like Patriot missiles, which can cost millions. Laser-based defense systems, by contrast, only cost several dollars per shot.
Having business partners in high places doesn’t hurt, either. nLight provides the laser technology for drone maker AeroVironment Inc.’s (AVAV) Locust laser system. It also has a deal with additive manufacturing (AM) technology company EOS to make nLight’s beam-shaping lasers available in EOS’ metal AM systems.
Wall Street loves the stock, with a consensus of analysts issuing a “buy” call with a $73 price target, representing 21.4% potential upside.
MACOM Technology Solutions Holdings Inc. (MTSI)
This company merges its technology into semiconductors and photonics, producing analog chips and optical components used in communications networks. The Lowell, Massachusetts-based semiconductor and module developer appears uniquely well positioned to capitalize on the ongoing transition to faster optical systems and silicon photonics, which are crucial for scaling AI infrastructure.
A hybrid semiconductor-photonics play tied to next-generation connectivity should continue to work for MTSI investors, who’ve already seen the stock rise by nearly 130% in the past 12 months and over 39% so far in 2026.
Analysts are on board with what MTSI is selling. In mid-March, Tore Svanberg, a technology analyst at Stifel, reiterated a “buy” call on MTSI with a $255 price target, up from $215.
Can You Invest in a Laser Photonics ETF?
As for laser photonics ETF options, the market remains thin. The L&G Optical Technology & Photonics ESG Exclusions UCITS ETF (LAZR.L), a London-listed fund tracking the Solactive EPIC Optical Technology & Photonics Index, which includes global optical tech and photonics companies, was liquidated in early 2026.
One option is Robo Global Artificial Intelligence ETF (THNQ). THNQ isn’t a pure photonics ETF, but it’s heavily exposed to “light speed” AI data center technology. “The fund broadly has exposure to the AI infrastructure buildout that photonics enables,” Buckley says. “Lumentum is its top holding, and it holds 54 companies across the AI value chain. This is probably the most accessible option for U.S. investors who want photonics exposure within the context of a broader AI thesis.”
Beyond that, pure-play photonics ETFs are “slim pickings,” Buckley notes. “There’s no major U.S.-listed ETF that’s exclusively laser- or photonics-focused.” So, he says, most investors who want exposure will have to get it through individual stock picks like those mentioned above rather than a dedicated fund.
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5 Top Laser Photonics Stocks for 2026 originally appeared on usnews.com
