Millionaires are Hitting These 10X Stocks HARD!
Summary
Brian begins by highlighting a groundbreaking advancement in China, where engineers have enabled a single optical fiber to carry five times more data than existing global technology, showcasing the rapid pace of innovation in photonics. He explains that AI is generating an unprecedented volume of data, leading to a 'starving' demand from hyperscalers for faster data transmission, which current copper infrastructure cannot meet. Copper degrades significantly in performance and efficiency beyond short distances (around three feet), making light-based photonics the inevitable solution due to its ability to transmit data further, cooler, and with less power.
Brian emphasizes that hyperscalers prefer to buy this technology rather than build it, creating a significant opportunity for suppliers of glass, lasers, and chips. He outlines the photonics supply chain, focusing on areas often overlooked: the glass/fiber itself, connectors, systems that light up the fiber, and underlying materials/test gear. He advises viewers that many of the mentioned stocks have already seen significant runs and suggests waiting for pullbacks, while also noting a pure-play photonics ETF (FOTO) for those who prefer not to pick individual stocks.
Mentioned Stocks
Reasoning: Brian notes Ciena as the Western leader in coherent optics with groundbreaking WaveLogic technology, which allows existing fiber to carry 1.6 terabits. This technology has quickly won 49 customers and is adopted by three of the four largest hyperscalers, leading to a $2 billion jump in backlog to $7 billion in 90 days. Revenue hit a record (up 40%) and operating margin doubled. However, he emphasizes the extremely high valuation (120x forward earnings), stating it is 'priced for absolute perfection,' making it a HOLD despite strong fundamentals.
Reasoning: Brian sees Credo Technology as a high-conviction name for a sharp pullback, bridging copper and optical technologies with proprietary low-power chips and recently acquired silicon photonics capabilities, shipping to all five largest US hyperscalers. Its revenue more than tripled in six quarters with high gross (68%) and operating (37%) margins, and it guides for over 80% revenue growth next year. He warns of concentration risk (88% revenue from three customers), insider selling, and a high valuation (35x sales), though a PEG near 1 justifies much of the growth.
Reasoning: Brian considers Amphenol a broad, lower-drama growth option at a fair price for owning the interconnect layer. He highlights its aggressive acquisition strategy, including the $10.5 billion purchase of CommScope's fiber connectivity business, making it a serious fiber player. Its AI data center segment is the largest and grew over 80% organically last quarter, with a record order book. The company expanded operating margins even after a major acquisition. Valuation is seen as reasonable (PEG around 0.7, 7x sales) for its growth rate.
Reasoning: Brian identifies Corning as the highest quality and lowest drama way to own optical fiber, holding the largest global market share and possessing unique technologies like new fiber designs and bend-insensitive glass critical for AI data centers. It's an anchor supplier to all major hyperscalers with multi-year, prepaid revenue. Optical revenue grew 36% last quarter, with profit surging 93%. He notes the stock is not cheap (PEG near 3, 9x sales) and advises waiting for a pullback before investing.
Reasoning: Brian discusses AXT as a small, speculative lottery ticket position due to its unique position as one of the few companies growing indium phosphide wafers, a critical material for optical lasers, creating a strong moat and a record backlog. However, he highlights significant risks: manufacturing almost entirely in China (requiring export permits, causing revenue shortfalls), shareholder dilution from a $550 million raise, insider selling, and ongoing losses (though shrinking). He notes its extremely high valuation at 66 times sales.
Reasoning: Brian recommends the Tuttle Capital Pure Play Photonics Fund (FOTO) for investors who prefer an ETF over individual stock picking. He highlights its 'pure play' nature, screening out conglomerates and focusing on genuine optics companies, with its top 10 holdings making up almost 90% of the concentrated fund. He notes its newness (weeks old, $140M AUM, 0.75% expense ratio) and advises due diligence, but considers it one of the best 'one-click exposure' options to the copper-to-light shift.