Key Takeaways:
US optical stocks fell broadly in pre-market trading, with Coherent down over 5% and Lumentum nearly 5%, as rising Treasury yields pressured the AI hardware trade.
UBS analyst Timothy Arcuri, in a note that flagged continued strength in Nvidia's Blackwell systems and an expected ramp of the Rubin platform as tailwinds for Marvell's optical products, said rising yields raise the discount rate applied to distant future earnings, compressing valuations most for stocks whose cash flows sit furthest in the future.
Marvell Technology dropped 6% to $219.28 in pre-market, giving back part of a 176% year-to-date run, while Corning fell nearly 4%. Broadcom slipped 2% to $384.59 and Nvidia eased 2% to $220.22. The iShares Semiconductor ETF slid 4% to $537.48, with the group's most extended names bearing the brunt of the selling. The 30-year Treasury yield hit 5.31% on Monday, a fresh multi-year high that pressures every long-duration growth name.
The selloff extended a rotation out of AI infrastructure names after Anthropic told investors its annualized revenue reached $65 billion at the end of July, below the $80 billion-plus whisper figures circulating in Silicon Valley. A Wall Street Journal analysis found nine top tech companies held some $3 trillion of off-balance-sheet commitments, mostly related to AI, about triple what they owe under outstanding leases and long-term borrowings. That capex is exactly what feeds the optics supply chain, making the group sensitive to any sign of a slowdown in AI infrastructure spending.
Lumentum, up 163% year to date, and AXT, up 487% over the past month, gave back the most after leading the group higher on reports of indium phosphide shortages. Fabrinet plunged 20% despite record fiscal fourth-quarter revenue of $1.316 billion, up 45% year over year, as investors read its guidance as conservative for a stock that had run hard.
The rotation is a positioning story as much as a fundamental one. The stocks that ran hardest into the session are giving back the most, with Lumentum still up 19% over the past week and Corning up 98% year to date. Nothing has changed about the indium phosphide supply picture in 24 hours, yet the group is trading as if the thesis broke.
If the 30-year gives back some of its move, expect the optical group to stabilize; if yields press higher, the profit-taking has more room to run. Marvell reports fiscal third-quarter earnings in nine days, a scheduled event that could reset expectations for the group.
This article is for informational purposes only and does not constitute investment advice.
