Serenity: A large number of excess return opportunities are expected to emerge in AI bottleneck areas by 2027.

Serenity released a report noting that Jensen Huang’s management experience at Nvidia highlights a critical supply chain strategy: If a company can lock in supplies of key materials in advance at low cost, it can avoid competitors suffering tens of billions of dollars in losses from supply shortages, making advance capacity locking extremely strategically valuable. For context, SOI’s photonics business revenue is projected to hit roughly $400 million in fiscal 2028. This supply chain dynamic will push procurement demand for key bottleneck segments further upstream in 2027, a trend that will hold regardless of whether Huang remains at the helm. On specific investment fronts, Morgan Stanley’s focus areas—copper clad laminates (CCL), ABF substrates, printed circuit boards (PCB), and optical module components—are worth watching. However, the bank is more bullish on sub-components with lower cost shares and tighter supply constraints, as well as key links that can lock in capacity in advance at lower cost. Currently, deleveraging pressures and broad market pessimism are indiscriminately weighing on related industrial chain assets, making it hard for individual stocks to fully reflect their fundamentals for now. Serenity added that it needs to be more selective when picking 2027 investment targets, reflecting on its 2026 investment performance. Still, as new architectures like near-packet optics (NPO) and co-packaged optics (CPO) gradually roll out across the industry ecosystem, a host of outsize investment opportunities are expected to emerge in key supply chain bottleneck segments.