This blog post breaks down Bank of America’s latest forecast for the AI optics market. The update came out after the 2026 Optical Fiber Communications conference and zeroes in on growth estimates for the years ahead.
They’re pointing to a path toward a $90 billion total addressable market (TAM) by 2030. That’s mostly thanks to co-packaged optics, optical circuit switches, data center interconnects, and other linking tech as AI compute keeps scaling out in those enormous hyperscale environments.
The post also takes a look at where optics beats copper, and how the big industry players are lining up to speed up adoption.
Market Outlook and Growth Drivers
Bank of America’s analysts expect a 40% CAGR—that’s from an $18 billion TAM in 2025 to $90 billion by 2030. This jump covers a mix of tech: pluggables, lasers, CPO (co-packaged optics), optical circuit switches, data center interconnects, and a handful of related innovations.
The forecast reflects how networking bottlenecks are tightening up as hyperscalers build bigger compute nodes and connect more of them. That’s making high-performance optical solutions a lot more attractive, maybe even necessary.
As AI workloads ramp up, optical solutions are looking more and more essential for long-haul and geo-dispersed links. Copper’s still hanging in there for really short distances, usually under 10 meters.
But in the bigger picture, optics seem poised to take a bigger piece of the interconnect pie, especially for links that cross facilities or continents. That means faster, more energy-efficient data transfer for AI training and inference—something everyone wants, right?
Technologies Driving Adoption
- Co-packaged optics (CPO) are emerging as a key building block for scaling out and scaling up interconnects.
- Pluggables and lasers help speed up time-to-market and fit more easily with existing server and switch setups.
- Optical circuit switches let data centers reconfigure data paths on the fly.
- Data center interconnect (DCI) solutions tie together racks and even entire sites for AI deployments.
- Other advances include better packaging, smarter thermal management, and improvements in signal integrity.
Market Structure and Adoption Pace
People in the industry keep pointing to CPO as the main driver for future growth. By 2030, a real chunk of optical ports could migrate to CPO architectures.
There’s an interesting split between scale-out CPO (adding lots of endpoints in parallel) and scale-up CPO (using higher-capacity, integrated modules). Both matter, but analysts think scale-up CPO will end up three to four times bigger in impact than scale-out.
Optical circuit switches are picking up steam as a way to route traffic more efficiently inside and between data centers. There’s a targeted TAM of about $4 billion by 2030 for this piece alone.
Combining CPO and optical switching could seriously change how hyperscale networks get built and run. More nodes, lower latency, better energy efficiency for AI—what’s not to like?
NVIDIA and Partner Role in Accelerating CPO Adoption
- NVIDIA’s GTC announcements dropped Spectrum-6 and Spectrum-7 scale-out CPO switches, plus NVLink-8 scale-up CPO solutions. It’s a clear push to speed up CPO adoption in AI infrastructure.
- These moves point toward denser, more capable optical interconnects—exactly what’s needed for massive model training and complex data orchestration.
- Plenty of industry watchers expect these technologies to help close the gap between compute and network speeds, making model iteration and deployment way faster.
Segments and TAM by 2030
Forecasts point to big changes in the data-center optics ecosystem. Several major players are laying out some pretty bold growth plans.
Lumentum, for instance, talked about a possible $2 billion quarterly sales model within the next 18–24 months. They also mentioned extra capacity from a new fabrication facility, which could crank out about $5 billion per year.
Coherent set its sights on a $70 billion TAM by 2030. They’re counting roughly $20 billion from new growth areas that go way beyond the usual laser and fiber products.
All this really paints a picture of companies piling on capital and know-how. The goal? Delivering the next generation of AI-ready optical interconnects.
The AI optics market looks ready for a major boost. Co-packaged architectures, better optical switching, and broader data-center interconnect strategies are all in play.
Hyperscale demand is converging with better packaging and manufacturing. Equipment vendors are making some pretty strategic investments, too.
This could mean multi-billion-dollar quarterly sales and a TAM in the tens of billions by the decade’s end. Of course, it all depends on how well the supply chain holds up and whether the tech can actually deliver real efficiency for AI workloads.
Note: This blog pulls together forecast insights from industry analysis and conference discussions, based on updates from financial and technology analysts as of the latest briefing period.
Here is the source article for this story: Lumentum and Coherent see AI optics market reaching $90 billion by 2030