At the beginning of June 2026, the CPO (Co-Packaged Optics) sector experienced significant volatility in both the A-share and US stock markets. On June 1, the A-share CPO concept index dropped 3.79% in a single day, with net outflows of main funds totaling 9.829 billion yuan. However, taking a broader view, the sector has surged over 200% since April 2025, with total market capitalization exceeding 3.3 trillion yuan. Beneath these fluctuations, the market is intensifying its debate over CPO’s technological roadmap, valuation digestion pressures, and the long-term certainty of AI computing power.
The real question isn’t "How much longer can CPO rally?" but rather: What structural changes are reshaping value distribution within the CPO industry? How do the positions of US market leaders and A-share targets differ across the supply chain? And when deploying cross-market strategies via platforms like Gate, what core logic should investors focus on?
Why CPO Is Moving from Concept to Performance Delivery
CPO technology integrates optical engines directly with switch chips, shortening optical paths and reducing power consumption. It’s considered a key solution to the connectivity bottleneck for AI clusters with millions of cards. While the industry generally defines 2026 as the "first year of CPO industrialization," a more accurate description is that the upstream optical chip segment began its performance breakout at the end of 2025, whereas large-scale system-level CPO deployments will await the introduction of NVIDIA’s Rubin Ultra platform in 2027.
The driving force behind the CPO sector has shifted from "theme speculation" to "performance validation." In Q1 2026, Lumentum’s revenue soared 90% year-over-year, with a gross margin of 47.9%. Coherent’s data center business posted $1.36 billion in revenue, up 39% year-over-year. Fabrinet achieved record revenue of $1.214 billion. All three companies have order visibility extending to 2028, and the supply-demand gap for indium phosphide substrates exceeds 70%, with prices skyrocketing from $800 to $2,500 per wafer.
The industry faces dual short-term pressures: "capacity bottlenecks" and a "technology roadmap race." LPO solutions pose a temporary substitute threat to CPO in terms of power and cost, and Microsoft has already adopted LPO. Over the long term, CPO’s market size in vertical expansion scenarios is projected to reach $10.39 billion by 2030—more than four times that of horizontal expansion scenarios. NVIDIA’s first adoption of Scale-Up CPO in the 2027 Rubin Ultra platform is expected to be the most definitive growth inflection point for the industry.
CPO is reshaping value distribution across the optical communications supply chain. In the traditional optical module era, profits were concentrated in module assembly. In the CPO era, value is shifting upstream to optical chips (EML, CW lasers) and advanced packaging. Lumentum, with its monopoly on EML chips, dominates upstream profits. Coherent achieves vertical integration across three major photonics platforms (InP, silicon photonics, VCSEL). Fabrinet, meanwhile, operates as a pure contract manufacturer—the "pick-and-shovel" provider.
Breakdown of the Four Core CPO Leaders in US Stocks
Within the current US CPO supply chain, four companies stand out with distinct positions and competitive advantages.
Lumentum: The absolute monopoly in EML chips. Nearly all 200G EML chips required for global 1.6T optical modules come from Lumentum. NVIDIA invested $2 billion in Lumentum in March 2026, securing future capacity. The company’s OCS (Optical Circuit Switch) backlog has surpassed $400 million, with additional multi-year, multi-million-dollar agreements signed. Q3 FY2026 revenue hit $808 million, up 90% year-over-year, with a 47.9% gross margin. High-end EML chip orders are booked through 2028.
Coherent: Vertical integration across three major photonics platforms. The only company globally to simultaneously master indium phosphide, silicon photonics, and VCSEL. NVIDIA also invested $2 billion. In Q1 FY2026, data center business revenue reached $1.36 billion, accounting for 75.4% of total revenue. The company disclosed a CPO addressable market of $15 billion, and its 6.4T CPO solution was showcased at OFC 2026.
Marvell: Dual focus on AI chips and optical interconnects. NVIDIA invested $2 billion as well. Marvell acquired Celestial AI for $5.5 billion to obtain CPO optical interconnect technology and is now developing its own CPO ASIC. The company significantly raised its FY2027 and FY2028 revenue outlook, with analysts projecting FY2027 revenue growth of about 40% and interconnect product revenue growth exceeding 70%.
Fabrinet: The contract manufacturing powerhouse with certainty logic. Fabrinet does not develop optical technology in-house but manufactures complex optical modules for COHR, LITE, and others. Q3 FY2026 revenue hit a record $1.214 billion, up 39% year-over-year. Management confirmed early CPO revenues and ongoing projects with all three clients.
The competitive landscape among these four shows "upstream chip oligopoly, midstream contract manufacturers benefiting regardless of winner, and system integrators relying on AI chip bundling." Lumentum’s EML moat is the deepest, Fabrinet’s risk exposure is the lowest, and Marvell offers the greatest upside but faces the most uncertainty in its technical roadmap.
How the CPO vs. LPO Technology Race Is Shaping the Market
The biggest debate in the current market centers on whether LPO will capture a larger share during the transition period, thereby delaying CPO’s adoption curve.
LPO eliminates the DSP chip in traditional optical modules, reducing power consumption by about 50%. Microsoft has made LPO its primary technology path. AAOI is the main beneficiary of the LPO route, with Q1 2026 revenue hitting a record $151.1 million for the fourth consecutive quarter, up 51% year-over-year. The company has guided for $1 billion in 2026 revenue and raised its monthly production target for 800G/1.6T to 650,000 units.
The two technologies are not fully substitutive. LPO offers cost advantages in short-distance, low port density scenarios, while CPO is indispensable for ultra-large-scale clusters and vertical expansion. Bernstein’s 97-page deep dive notes that CPO will not achieve mass adoption before 2028, and the more certain incremental performance in 2026 will be found in LPO/NPO segments.
This coexistence will likely persist until around 2028. Investors should distinguish between companies: Lumentum and Coherent benefit from both CPO and traditional optical module upgrades (with 800G/1.6T demand still booming), while AAOI’s valuation reflects optimistic assumptions about the LPO route. Its current Non-GAAP gross margin is only 29.2%, indicating weaker profitability compared to peers.
How Institutional Capital and Liquidity Are Repricing CPO
From late 2025 to May 2026, the US optical communications sector saw clear capital rotation: some funds shifted from fully priced AI computing leaders like NVIDIA to optical networking companies.
Institutional behavior: In Q1 2026, Zhongtian Technology in the A-share CPO sector saw institutional holdings increase by 182 million shares. Hengtong Optic-Electric’s institutional holding ratio rose from 40.72% to 43.94%. In the US, institutional concentration in Coherent and Lumentum surged after NVIDIA’s investment announcement. J.P. Morgan rated Fabrinet "neutral," noting its current stock price partly reflects the super-cycle benefits of AI hardware.
Pricing power in the CPO sector is shifting from retail-driven sentiment to institutional performance validation. The 2025 rally relied heavily on concept expectations. After Q1 2026 earnings, the market began screening targets based on hard metrics like "order visibility, gross margin trends, and capacity expansion progress." Concept stocks lacking technical moats and performance support saw larger declines in the June 1 correction.
If the Federal Reserve enters an easing cycle in the second half of the year, global liquidity will further benefit growth tech stocks, and the CPO sector could attract incremental capital allocation. However, internal differentiation will intensify: upstream optical chips (Lumentum, Coherent) and contract manufacturers (Fabrinet) offer greater performance certainty and less valuation pressure, while companies dependent on single customers or technical routes face higher volatility risks.
Pathways and Considerations for US CPO Allocation via Gate
On June 1, 2026, Gate officially launched its stock trading service, allowing users to trade US CPO core stocks directly with USDT/USDC.
Gate Stocks connects directly to major markets like NYSE and Nasdaq. It currently supports real-time trading of CPO-related stocks such as COHR, LITE, MRVL, FN, and AAOI, with no funding rates or overnight holding fees. Additionally, Gate’s contract stock section has launched perpetual contracts for AAOI and others.
The launch of Gate stock trading reduces friction costs for crypto users allocating US stock assets. For investors focused on the CPO sector, there’s no need to leave the crypto ecosystem—cross-market allocation can be completed within a single account. However, note that US stock trading hours, liquidity depth, and requirements for tracking company fundamentals differ significantly from traditional crypto assets.
The CPO industry still faces multiple risks: technological roadmap uncertainty, capacity bottlenecks, and US-China tech tensions. On June 1, 2026, the sector dropped 3.79% in a single day, with main funds net outflows of 9.829 billion yuan, reflecting high-level speculative characteristics. Investors should distinguish between leaders with technical moats and performance support versus concept-driven stocks.
FAQ
What are CPO concept stocks?
CPO concept stocks refer to listed companies positioned along the co-packaged optics technology supply chain, covering upstream optical chips (like Lumentum), midstream optical modules (like Coherent), and downstream contract packaging (like Fabrinet).
Who are the leading US CPO companies?
The main US CPO leaders include Lumentum (EML chip monopoly), Coherent (vertical integration of three major photonics platforms), Marvell (AI chips + optical interconnects), Fabrinet (pure contract manufacturer), and AAOI (representative of the LPO route).
Which technology path has more potential: CPO or LPO?
CPO is irreplaceable in ultra-large-scale cluster and vertical expansion scenarios, while LPO offers short-term cost advantages in short-distance applications. Both technologies are expected to coexist until 2028, with NVIDIA’s adoption of CPO in the 2027 Rubin platform marking a key turning point.
How are CPO concept stocks performing?
In Q1 2026, Lumentum’s revenue surged 90% year-over-year, Coherent’s data center business grew 39%, and Fabrinet’s revenue jumped 39% to a record high. The upstream optical chip segment has already entered its performance breakout phase.
What are the core risks facing the CPO industry?
Key risks include uncertainty in the technology roadmap (LPO competition), capacity bottlenecks (indium phosphide substrate shortages), high valuation pressures, and potential supply chain impacts from US-China tech tensions.
How does Gate support trading of US CPO concept stocks?
Gate’s stock trading service supports US CPO stocks such as COHR, LITE, MRVL, FN, and AAOI. Users can buy stocks directly with USDT/USDC, with no funding rates or overnight holding fees.
Where is the next growth inflection point for the CPO sector?
The industry widely expects that NVIDIA’s first adoption of Scale-Up CPO in the 2027 Rubin Ultra platform will be the most certain growth inflection point. By 2030, the vertical expansion CPO market is projected to exceed $10 billion.
How should investors assess the value of CPO concept stocks?
Focus on key factors such as technical moats (in-house optical chip capabilities), depth of customer binding (whether they’re in NVIDIA/cloud vendor supply chains), capacity expansion progress, and gross margin trends—rather than short-term stock price gains.
