Nvidia invests $4B in Lumentum and Coherent to secure AI optics supply
What's the deal? Nvidia has announced $2 billion investments in each of LumentumDealroom has a profile for this one. Try Dealroom → and Coherent, two US-based makers of advanced optical components, in separate multiyear strategic agreements totalling $4 billion.
Each deal includes a multibillion-dollar purchase commitment from Nvidia and future capacity access rights for advanced laser products. The money will fund R&D and help both companies build out US manufacturing capacity.
Lumentum makes high-performance lasers and photonic components used in AI data centres and cloud infrastructure. Coherent develops advanced optics and communications technology for the same markets.
Both companies' shares jumped on the news — Lumentum rose roughly 7% and Coherent around 11% in premarket trading.
Why now? As AI data centres scale to gigawatt levels of power consumption, the copper interconnects that traditionally link chips are hitting bandwidth and energy limits. Optical interconnects — which use light rather than electricity — offer a faster, more energy-efficient alternative. Nvidia is betting that securing supply of the underlying laser components now, before demand spikes, is critical to keeping its AI infrastructure roadmap on track.
Lumentum will use part of the investment to build a new fabrication facility to increase manufacturing capacity. Both deals are non-exclusive, meaning Lumentum and Coherent can continue supplying other customers.
What could go wrong? Building new semiconductor fabs is slow and expensive, and demand projections for AI infrastructure have repeatedly surprised in both directions. If the AI spending cycle cools or Nvidia's own chip roadmap shifts, the purchase commitments underpinning these deals could become a source of friction rather than a strategic advantage.
Export controls on advanced components — flagged as a risk in both companies' filings — could also complicate supply chains, particularly given the sensitivity around US-China technology trade.
The signal: This is Nvidia deploying its enormous profits — it reported record revenues in February 2026 — to vertically integrate its supply chain without formally acquiring anyone. Rather than buying Lumentum or Coherent outright, it is locking in capacity through investment and purchase commitments, a model it has also used with CoreWeave and OpenAI.
The message to the market is clear: optical interconnects are no longer a peripheral technology concern for AI infrastructure — they are critical path, and Nvidia intends to control access to them.
Sources:
Nvidia
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Reuters
Bloomberg
CNBC
Tech Funding News
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