LITE&COHR 4Q25: Why Optics Is One of the Primary Beneficiaries of AI Infrastructure Upgrades?

Since our last deep dive on LITE and COHR, the core investment thesis for both companies has continued to gain market attention. As AI agents drive sustained growth in token generation, the incremental load ultimately translates into hard infrastructure constraints around bandwidth, power efficiency, and total cost of ownership. This, in turn, is accelerating a shift in network architecture away from pure scale-out designs toward more aggressive scale-up configurations and rack-level optics.

LITE

One of the most direct plays in the TPU ecosystem

• We continue to view LITE as occupying a central optical position within Google’s TPU architecture, spanning TPU, OCS, and 3D Torus interconnects.

OCS moving from architectural option to volume deployment

• We expect OCS to begin scaling meaningfully in the second half of 2026 and to become one of the company’s core growth drivers over the following years.