SAN FRANCISCO, March 4, 2026, 07:02 PST
- Nvidia is putting $2 billion apiece into optics suppliers Lumentum and Coherent.
- These agreements lock in long-term buying and secure capacity for laser and optical networking components—key hardware for AI data centers.
- Nvidia snapped up 7.79 million shares in Coherent through a $2 billion private placement, a filing revealed.
Nvidia (NVDA.O) is set to put $2 billion apiece into photonics suppliers Lumentum (LITE.O) and Coherent (COHR.N), stepping further into the tech that connects its AI chips within data centers.
Here’s the catch: bottlenecks are cropping up beyond the processor itself, and they’re not minor ones. As AI systems scale, shuttling data between chips, racks, and entire clusters is turning into a tougher—and pricier—problem for the industry.
Photonics swaps out electrical signals for light to transmit information. Nvidia and its partners say that lets them handle bigger data loads while using less energy—something that’s key when AI models are operating at their highest levels.
The company is chasing speed. Faster links should cut down the time chips sit idle waiting for data, which in turn lifts “inference” — that’s the process of generating answers from a trained AI model.
Nvidia and its suppliers described the deals as nonexclusive, locking in multibillion-dollar purchase agreements along with future rights to advanced laser and optical networking gear. Funding gets linked to boosting U.S. R&D and manufacturing capacity, too.
Nvidia CEO Jensen Huang put it plainly: “Computing has fundamentally changed.” He described the move as a push toward “next-generation silicon photonics” on a much bigger stage. For Coherent, CEO Jim Anderson framed the partnership as proof of the company’s place as “a key enabler” for next-gen AI data center gear. NVIDIA Newsroom
According to Coherent’s Form 8-K, Nvidia picked up 7,788,161 shares for $256.80 each—$2 billion in cash—through a private placement. The filing notes the capital is earmarked for R&D, adding capacity, and boosting U.S. manufacturing.
Huang, in a statement alongside Lumentum, called AI the force behind a “historic infrastructure buildout.” Lumentum chief Michael Hurlston added the company is “also investing in a new fabrication facility to increase capacity.” NVIDIA Newsroom
The investments arrive as competition heats up. Advanced Micro Devices, for one, is pushing its own data center accelerators. Big cloud providers aren’t standing still either—they’re still building custom chips, looking to cut dependence on third-party suppliers.
Execution stands out as a risk here—scaling up optical components isn’t straightforward, and setting up factories eats up time. Policy throws another wrench into the mix. People familiar with the situation say the Trump administration has floated capping Nvidia’s H200 chip sales to Chinese firms at 75,000 units apiece, threatening to choke access in a crucial market.
Nvidia’s annual GTC conference lands in San Jose March 16-19, with CEO Jensen Huang set for the keynote. “GTC is the epicenter of the AI industrial era,” Huang said in the event release. investor.nvidia.com
