Here are three AI optical networking stocks to watch heading into 2027.
1. Credo Technology (CRDO)
Credo Technology (NASDAQ: CRDO) develops high-speed connectivity solutions for AI data centers. They expect their optical portfolio to become a significant growth driver in fiscal 2027 as their services expand to accommodate hyperscale clients.
Wall Street X has rated CRDO stock a Strong Buy and is projecting a 106% upside. The current analyst consensus is also a Strong Buy and they have an average forecast price of $273.04 which is 63% higher than where it trades today.
CRDO has premium valuation at a PE of 59 but its incredibly high 115% EPS growth forecasts give it a PEG of just 0.51 which is a very strong number.
While we maintain our Strong Buy rating, we must emphasize its high risk, high reward investment profile as any dip or stagnation in AI infrastructure spending would put CRDO at serious risk of a valuation collapse.
2. Lumentum Holdings (LITE)
Lumentum (NASDAQ: LITE) also develops optical and photonic technologies used in AI and cloud infrastructure. LITE is a strong AI stock contender because AI clusters require fast communication between GPUs, and optical connectivity is quickly becoming an increasingly large part of data center spending.
Lumentum has reported $1 billion in fiscal Q4 2026 revenue, up 109% year over year, and expects Q1 fiscal 2027 revenue of $1.2 billion to $1.3 billion.
Lumentum’s rapid revenue growth makes LITE one of our favorite stocks for gaining exposure to the transition toward optical AI networking. That said, it does have a PEG ratio of 2.10 thanks to its PE ratio of 88.
Wall Street X has LITE rated a Strong Buy with a 96% one year projection with a target price of $1935.43. The average analyst rating is a Buy with a 1% upside.
3. Coherent (COHR)
Coherent (NYSE: COHR) is another major supplier of optical technologies used across communications and data center infrastructure. Unlike a lot of pure-play AI networking companies, Coherent offers a broader range of photonics products which slightly lowers its risk through diversification.
Coherent currently has an extremely attractive PEG ratio of just 0.17 thanks to its high EPS growth forecasts.
Wall Street X has COHR stock as a Strong Buy with a target price of $448.24 which is 48% higher than where the stock trades today. The consensus rating is also a Strong Buy, with analysts forecasting a 23% stock price increase over the next year at a target price of $372.98.
Which AI Optical Networking Stock Is the Best Buy?
Our favorite of these three stocks is CRDO because it offers exceptional growth and increasingly direct exposure to next-generation AI connectivity. It also has the lowest market cap of just $30B, which gives it more room to run compared to LITE’s $83B and COHR’s $59B.
Are AI Optical Networking Stocks a Good Investment for 2027?
AI optical networking stocks stand to benefit as data centers require faster and more power-efficient ways to move, process, and store information.
Rather than trying to predict which AI model ultimately dominates, companies such as Credo, Lumentum and Coherent provide investors with exposure to the infrastructure required to build and operate increasingly powerful AI systems.
