The firm projects the total addressable market for optical networking, driven by AI infrastructure, will grow from US$15 billion (GB300 NVL72 in 2026) to US$154 billion (Rubin Ultra NVL576 in 2028). Co-packaged optics (CPO) are expected to contribute US$91 billion, capturing 59% of this overall TAM, assuming a 29% penetration rate in scale-out architectures. Light source supply, including EML and CW lasers, is anticipated to remain very tight through 2026/2027 due to booming AI demand and Indium Phosphide (InP) substrate export controls from China.
AI compute scale-up will drive a massive shift to optical networking, making CPO and silicon photonics critical bottlenecks, while Indium Phosphide supply remains tight.