In the race for absolute AI dominance, Nvidia is once again rewriting the rules of the game in 2026. This time, her attention was drawn to the physical limits of data transmission. The company announced a massive, multi-year strategic investment totaling $4 billion, split equally between two key players in optics and photonics – Lumentum and Coherent.
Strategic pillars of optics
Nvidia has distributed its capital very precisely. $2 billion is going to Lumentum to strengthen R&D in networks for cloud computing and AI infrastructure. The deal also includes a multibillion-dollar component sourcing commitment, giving Nvidia priority access to advanced laser technologies that are essential for high-speed communications in data centers.
Coherent share price performance over the past 5 years*
Lumentum share price performance over the past 5 years*
In parallel, it is investing another $2 billion in Coherent. Here, the collaboration focuses on the development of a new generation of silicon photonics (silicon photonics). This technology uses light particles (photons) instead of electrons to transmit information directly in and between chips, which radically reduces energy consumption and increases data throughput.
Jensen Huang's vision
According to Nvidia CEO Jensen Huang, the goal of this investment is to accelerate the construction of AI infrastructure on an unprecedented scale. Nvidia will no longer focus only on the chips themselves, but on the entire architecture of "AI factories" that will operate at gigawatt levels of consumption.
In such huge complexes, traditional copper cables and electrical interconnections become bottlenecks due to overheating and signal loss. Optical solutions and photonics are the only way to maintain efficiency when connecting hundreds of thousands of graphics processing units (GPUs) into one coherent computing unit.
Investor confidence
Financial markets reacted enthusiastically to the announcement, confirming that investors see photonics as the next necessary step in the evolution of AI. Coherent shares rose an impressive 15%, while Lumentum gained 12%.* Nvidia itself saw a modest but steady increase of 3%, reflecting market confidence in its long-term strategy of vertical integration and supply chain security. *
Nvidia stock price performance over the past 5 years*
Ensuring dominance
The investment in photonics is a clear signal that Nvidia is trying to diversify its risks and eliminate potential logistical hurdles before they arise. By securing the capacities and rights to advanced laser components, the company is creating an impenetrable barrier to competition, which is still primarily focused on the architecture of the chips themselves. In 2026, the fight for the primacy of AI is definitely moving from the field of software and logic to the field of materials science and light transmission.
* Past performance is not a guarantee of future results
Sources:
https://www.cnbc.com/2026/03/02/nvidia-investment-coherent-lumentum.html
