Serenity: Goldman Sachs sharply raises earnings forecasts for Zhongji Innolight, with the fundamentals of the AI optical module industry chain continuing to improve.

Analyst Serenity published a note stating that Goldman Sachs has raised its price target for China Unichip to 2,581 yuan, representing around 163.6% upside from the current share price. Serenity pointed out that, rather than the price target, what deserves more attention is Goldman Sachs’ sharp upward revisions to China Unichip’s 2026–2028 earnings forecasts, by 65%, 108%, and 119% respectively. Goldman Sachs attributes this to key drivers including surging shipments of silicon optical modules, ongoing expansion of AI infrastructure, higher average selling prices (ASPs) and margins from 1.6T/3.2T optical modules, and sustained growth in AI capital expenditure. Serenity views China Unichip as a critical barometer for the optical communication sector’s prosperity, analogous to Taiwan Semiconductor Manufacturing Company (TSMC) for semiconductor capital spending. If silicon photonics penetration continues to rise, it will further expand demand in niche segments such as continuous wave (CW) lasers and silicon-on-insulator (SOI) substrates, while higher ASPs for next-generation high-speed optical modules will also benefit the entire optical communication industry chain. Additionally, Serenity noted that China Unichip previously disclosed in communications that demand for 800G optical modules has exceeded expectations, meaning upcoming earnings results from optical communication firms including Applied Optoelectronics (AAOI) and Lumentum (LITE) also merit close attention. Serenity concluded that, amid a sharp sector pullback, Goldman Sachs’ large upward earnings revisions reflect the robust fundamentals of the AI optical communication industry chain, and the entire photonics ecosystem is poised to benefit from the new wave of AI infrastructure development.