Serenity: Laser Manufacturers May Have Greater Expansion Potential Amid AI Computing Power Demand, Lumentum Case Worthy of Attention

Serenity noted that its earlier revenue projections based on Sivers (SIVE)'s annual target of 100 million CW DFB lasers were merely illustrative models. The key driver behind its optimism for laser companies is that these firms are not confined to a single laser product, and can further expand into other segments of data center optical communications. Taking Lumentum (LITE) as an example, Serenity pointed out that after Lumentum acquired Cloud Light (specializing in pluggable optical modules), it expanded its potential data center service market to over five times its previous size. Lumentum’s OFC presentation materials also show that its ELS business, based on UHP laser chips, can deliver approximately double the total addressable market (TAM) expansion opportunity. He added that a single UHP laser wafer fab’s laser business is projected to generate around $5 billion in annual revenue once production capacity ramps up. Coupled with AAOI’s data that CPO lasers carry a gross profit margin of 55%-65%, lasers already boast strong profitability. Serenity believes that even as the industry continues to expand production, the laser market may still face a supply-demand gap. Moreover, with overlapping technological cycles including NPO, CPO, and 1.6T pluggable optical modules, laser manufacturers are poised to enter new product markets continuously. Therefore, compared to companies that remain stuck in a single supply chain tier long-term, Serenity argues the market should assign higher valuation premiums to laser enterprises.