Goldman Sachs: Optical Networking Is AI's Next Trillion-Dollar Opportunity

Goldman Sachs has identified the optical networking sector as one of the biggest investment opportunities tied to artificial intelligence, predicting it could grow more than tenfold by 2028. According to a report from the bank, the biggest winner in this space may not be a name most AI investors are watching yet.

Details

Goldman Sachs analysts pointed to the growing demand for AI infrastructure, which will require high-speed, low-latency communication networks—capabilities provided by optical technologies. The report forecast that the market for optical components used in data centers and AI networks could reach $1 trillion by 2028.

Context

These projections come amid strong demand for AI-related products from companies like Nvidia (NVDA), Broadcom (AVGO), and Marvell (MRVL). However, Goldman Sachs believes Lumentum, a specialist in optical components, may be best positioned to capitalize on this growth due to its expertise in laser and fiber optic technologies used in data centers.

What This Means for Investors

This report signals a potential shift in investor focus toward companies providing the underlying infrastructure for AI, rather than just chipmakers. However, investors should assess the risks associated with this sector, including competition and rapid technological changes.