(Bloomberg) -- US optical communication stocks rallied on Wednesday, with POET Technologies Inc. (NASDAQ: POET) surging more than 21% as investors piled into companies seen as critical to the buildout of artificial intelligence infrastructure.
"The AI buildout requires a massive upgrade to the underlying optical infrastructure," said a technology analyst. "Investors are betting on companies like POET to be key beneficiaries of this multi-year trend."
The rally also saw Astera Labs Inc. gain over 5%, while Acacia Communications Inc. (AAOI) and Nokia Oyj (NOK) both rose more than 4%. Credo Technology Group Holding Ltd (CRDO) was up over 3%. The gains came amid a broader market discussion around the essential hardware for AI, with chip stocks like Advanced Micro Devices Inc. (AMD) and Marvell Technology Inc. (MRVL) also hitting 52-week highs.
The excitement around the sector, however, was tempered by a broader tech selloff on Thursday. POET Technologies gave back some of its gains, falling 7.3% in a volatile session that saw the stock down as much as 15.7% earlier in the day. The pullback was linked to a bearish reaction to ServiceNow Inc.'s earnings and guidance, which raised concerns about weakening pricing power in the software sector and sparked a more cautious stance on tech stocks at large.
Despite the one-day drop, POET's stock was still up 61% over the past week, marking its best performance in nearly two years. The surge was fueled by speculation about the company's role in the AI supply chain, with some traders on social media platforms pointing to a potential, though unconfirmed, connection to Amazon.
The optical communications sector is seen as a key enabler of AI, providing the high-speed data transmission necessary for large language models and other AI applications. This has led to increased investor interest in companies that produce optical components and other related technologies.
This article is for informational purposes only and does not constitute investment advice.
