Buy these stocks to ride the next big AI wave — connectivity, analyst says

As the artificial intelligence buildout matures, the investment narrative is expanding beyond chipmakers toward the infrastructure that moves data between them. Deutsche Bank’s research team has identified connectivity as the next major AI growth phase, singling out optical hardware providers Coherent and Lumentum as its “highest conviction” picks in the sector.

The logic is straightforward: large-scale AI training requires immense clusters of servers working in parallel, and those servers depend on high-speed optical interconnects to share data efficiently. Companies like Coherent and Lumentum manufacture the lasers, photonic components, and transceivers that form the backbone of these datacenter networks. As cloud providers scale their AI capacity, demand for these sophisticated components is expected to expand alongside the more widely discussed processor market.

For those tracking the AI trade, the focus may shift to order visibility and capital-expenditure guidance from major cloud customers, as well as technology transitions in optical networking. Analyst ratings are subjective views, and individual investors should weigh a company’s financials and competitive position before making any decisions. The broader takeaway is that the next wave of AI growth may rely as much on how systems connect as on how they compute.