This article digs into how investors are chasing optical-connectivity and photonics to catch the AI-fueled data-center wave. It puts the spotlight on the new Corgi Lithography & Semiconductor Photonics ETF (EUV) and explores the messy, sometimes frothy, valuation and growth scene shaping the sector.
The fund leans heavily into photonics, EUV lithography, and the tools that keep semiconductors humming. Right now, it’s got about $93 million in assets, spread across 39 stocks. You can see how the big players in chip-making and lithography shape the whole story around data-center hardware and AI workload demand.
AI-driven demand, photonics, and the EUV ETF landscape
The Corgi fund pours at least 80% of its assets into companies that really move the needle in photonics, EUV lithography, and related semiconductor tools. That approach lines up with the broader industry trend: AI keeps pushing for faster, better data-center interconnects and more lithography muscle.
Some of the most recognizable names in chip fabrication and lithography sit at the heart of the fund. The two biggest positions? Taiwan Semiconductor Manufacturing Co. (TSMC) at 9.6% and ASML at 8%. It’s a clear nod to just how crucial foundry capacity and EUV machines have become in modern semiconductor supply chains.
Market signals: valuations, growth expectations, and a snapshot of leading names
People watching the market say the EUV-focused world still offers a shot at long-term growth in photonics, but you’ll pay up for it. MarketWatch sifted through EUV’s holdings and tossed in some big names like Broadcom, Nvidia, and Cisco, narrowing it to a 29-stock group with revenue estimates stretching through 2028.
This group trades at a forward p/e of about 40.6. That’s way above the S&P 500’s roughly 20.9 and the iShares Semiconductor ETF’s around 27.1. Clearly, investors expect a lot from these companies.
Analysts see strong growth tied to this crew. The LSEG consensus puts their two-year revenue CAGR at 19.1%, compared to the S&P 500’s projected 7.8%. Of the 29, about 15 stand out for the highest CAGRs through 2028.
Top names include AXT at 192.7%, Aeva at 156.4%, and Lumentum at 56.6%. Others with strong growth estimates are Broadcom, Nvidia, Marvell, and TSMC.
But there’s a catch. Some of these stocks have sky-high forward P/Es or barely show any earnings at all—think AXT, Aeva, nLight. That means a lot of optimism is already baked in, and these names could get whipsawed by execution hiccups or shifts in demand.
Needham analyst Ryan Koontz points to Lumentum and Ciena as his top picks, thanks to hyperscaler spending and climbing prices for optical components. He also likes Broadcom, Tower Semiconductor, and Marvell, arguing that every new GPU generation—from Hopper to Blackwell—craves higher-performance optical interconnects. Koontz figures this keeps demand for photonics and optical-networking gear strong as AI keeps evolving.
Investment implications and what to watch next
For researchers and industry professionals, there are really two main takeaways here. AI-driven data centers are pushing a lasting demand for advanced photonics and EUV lithography, which means steady business for companies making specialized equipment and components.
Valuations already reflect strong growth expectations, but they also make the sector sensitive to earnings surprises and swings in the semiconductor cycle. If you’re investing, it’s smart to keep an eye on hyperscalers’ capital spending, new GPU timelines, and how suppliers set prices for optical interconnects as AI workloads keep ramping up.
Key takeaways for investors:
- TSMC (9.6%) and ASML (8%) really anchor the EUV-centric theme. Modern chipmaking and lithography depend heavily on these companies and their supply chains.
- The EUV/MOC-focused group shows strong expectations for revenue growth, but their higher forward P/Es hint at more risk and wider swings in returns.
- Some growth names—AXT, Aeva, Lumentum—offer real upside, but you’ve got to be careful since their earnings aren’t always predictable.
- Analysts like Ryan Koontz point out the staying power of photonics demand, largely thanks to hyperscalers and new GPU generations. Maybe be optimistic, but don’t skip doing your homework on stock selection.
As data centers keep expanding to handle more AI, photonics and optical connectivity will likely stay in the spotlight. Strategic investors and researchers looking for the next big thing in semiconductor tools and interconnects should probably keep watching this space.
Here is the source article for this story: Optical stocks are booming. Here’s how to invest in one of the most explosive areas of tech.