5 Things Failing in AI. One Technology Fixes Them All!

BWB - Business With Brian•Mar 15, 2026

Summary

Brian's main thesis is that the AI industry is hitting a "physics wall" with copper connectivity as data rates move toward 1.6 terabits per second. At these speeds, copper cables generate excessive heat and signal degradation, whereas silicon photonics—using light instead of electricity—is 3 to 3.5 times more power efficient. Brian outlines a massive market expansion, with current valuations at $3 billion projected to reach up to $30 billion by 2034. He structures the investment opportunity into three layers: the base layer of established giants, the middle layer of specialized foundries, and the top layer of pure-play photonics companies.

Brian provides a breakdown of several key players in the sector:

Nvidia (NVDA): Brian highlights that Nvidia is integrating silicon photonics directly into its Vera Rubin platform and Spectrum 6 Ethernet switches. He emphasizes that photonics is an essential infrastructure component for 1.6 terabit speeds rather than just an accessory. Brian views Nvidia’s $4 billion investment in the sector as a massive validation of the technology’s necessity.

Broadcom (AVGO): Brian identifies Broadcom as the current industry leader in co-packaged optics, currently on its third generation of the technology. He explains that they are already committed to a fourth generation that doubles the current lanes to 400 gigabits. While photonics is currently a small revenue slice, Brian expects it to become a meaningful growth layer for their dominant business.

Cisco (CSCO): Brian notes that Cisco’s acquisition of Luxtera in 2019 positioned them as an early leader in the photonics integrated circuit market. He points out that they are already producing 800 gigabit transceivers and prototyping 25 terabit switches. Brian believes photonics is the key reason Cisco will remain relevant as data centers transition away from copper.

Intel (INTC): Brian argues that Intel is the most advanced research player in the world, having shipped over 8 million photonic integrated circuits. He mentions their OCI chiplet offers a 3x power efficiency advantage over traditional modules. Despite being a higher-risk pick, Brian sees Intel's unique optics-based foundry service as a massive strategic asset.

TSMC (TSM): Brian states that TSMC's announcement of a dedicated platform for mass-producing photonic components by 2026 is the ultimate validation signal for the industry. He suggests that when the world's largest foundry builds a specific production line, the technology has reached a critical turning point. Brian views TSMC as a major beneficiary as they scale these components for global customers.

Tower Semiconductor (TSEM): Brian describes Tower Semiconductor as a leading specialty foundry that manufactures photonic circuits for other designers at scale. He notes they have a direct partnership with Nvidia to build 1.6 terabit optical modules. With over 70% of their expanded capacity already reserved through 2028, Brian sees strong visibility in their revenue growth.

GlobalFoundries (GFS): Brian notes that GlobalFoundries is a scale player that combines fabrication with advanced packaging for complete optical modules. He highlights management's projection of a $1 billion run rate by 2028, following consecutive years of doubling photonics revenue. Brian advises that while the top line is currently flat, the growth signal in their photonics segment is clear.

Fabrinet (FN): Brian calls Fabrinet the "safest entry point" because they act as a precision manufacturer for the industry’s biggest winners without the technology risk. He reveals that the companies Nvidia invested in actually manufacture their products through Fabrinet's facilities in Thailand. Brian likes their clean financial profile and the fact that their book value has doubled in five years.

Coherent (COHR): Brian highlights Coherent as the world's largest vertically integrated photonics company, managing everything from laser chips to final modules. He notes the recent $2 billion strategic investment and purchase commitment from Nvidia as a major catalyst. Brian finds the valuation attractive, pointing to a PEG ratio of 1.1 and recovering gross margins.

Lumentum (LITE): Brian explains that Lumentum provides the external lasers required for silicon photonics chips, making them a winner regardless of which transceiver company gains market share. He notes that Nvidia’s $2 billion deal with Lumentum is the largest laser commitment in the company's history. Brian identifies Lumentum as the cheapest play in the sector with a PEG ratio of 0.61.

Marvell Technology (MRVL): Brian states that Marvell dominates the digital signal processing market, with their chips inside 50% of 800 gigabit transceivers. He highlights the acquisition of Celestial AI as a game-changer for optical chiplet connectivity. Brian notes that despite GAAP losses from amortization, the business is healthy on a cash flow basis with a low PEG ratio of 0.64.

Spark AI (SPRK): Brian introduces this company as a software firm building GPS-free target acquisition and navigation for drones. He mentions the stock is currently priced just over $1 and has experienced over 122% growth year-to-date. Brian emphasizes the company's expansion into the Ukraine defense market and its high-margin licensing model.