Huang Renxun's attempt to "ignite" the sector failed: GTC mentioned optical communications, so why did the sector fizzle out?

Written by: DaiDai, Maitong MSX

Many people believe that Jensen Huang will completely ignite optical communications at GTC this time.

After all, this area has been hot for far too long. From CPO to silicon photonics, from optical modules to high-speed interconnects, the market has poured almost all its imaginations about AI infrastructure upgrades into this area. Coincidentally, OFC 2026 is also being held in the same week: the technical conference from March 15th to 19th, and the exhibition from March 17th to 19th. One is Nvidia outlining its roadmap, and the other is the entire optical communication industry chain flexing its muscles; naturally, the hype has reached its peak.

So before Huang Renxun took the stage, what the market was waiting for wasn't just an ordinary speech, but a spark. What everyone wanted to hear wasn't "the future direction is fine," but a clearer statement: in the next phase, light will be the main theme.

Unfortunately, Huang Renxun did not say this version of events.

Source of Jensen Huang's speech at GTC: The Business Journals

Huang Renxun clearly talked about light, so why isn't the market buying it?

The reason why optical communication has been so hot lately is not just because it sounds advanced, but because the logic is so smooth - as AI clusters grow larger and larger, the pressure on data transmission increases, copper will eventually encounter bottlenecks, so shouldn't optical communication be the next step?

This story is too easy to believe. And precisely because it's so easy to believe, the market will naturally take it a step further. Since the direction is so clear, its realization shouldn't be too far off.

Therefore, before GTC, many funds were no longer discussing "whether it will work," but rather betting in advance whether Huang Renxun would make this matter even more aggressive than everyone expected.

Data center room and cabling information source: The Fiber Optic Association

The issue isn't whether he mentioned light or not.

He certainly brought it up, and quite forcefully. But what Huang Renxun really meant was that while light is important, copper won't be phased out anytime soon. "Nvidia plans to continue using copper-based connections and newer optical technologies in its upcoming platforms (including Vera Rubin Ultra and future systems)."

The market originally wanted to hear that Guang was about to take over completely, and this slight difference was enough to change the market's attitude.

This is also the most awkward thing about the market, because what stocks fear most is often not bad news, but that the news is not as good as expected.

The problem isn't whether or not to "see the potential," but whether or not to "deliver on it now."

The most easily misunderstood point this time is that many people will interpret it as "light is no longer viable" or "copper has won".

Actually, none of those are true.

A more accurate statement is that the long-term logic of optical technology hasn't changed; what has changed is the market's perception of how quickly it will deliver on its promises. NVIDIA's official technical blog's description of the Vera Rubin platform actually explains this logic quite clearly: larger-scale systems will use direct optical connections for rack-to-rack connections, but many locations within the rack will still be built on copper spines and pre-integrated copper cables.

Simply put, copper is still the main component in many places within a rack; it is only in larger-scale, multi-rack applications that the importance of optical technology begins to increase significantly.

Therefore, the real correction in GTC this time is not in direction, but in timeline. Previously, the market bought into this line by buying into a huge future; now the market is starting to ask: who will deliver on this future first, and when?

CPO equipment/system showcase source: Cisco Blogs

The market has shifted from a state of "full recovery" to one of "beginning to differentiate."

That's why, after the speech, the whole line didn't "charge together," but rather there was some chaos before the lines started to diverge.

Barron's summary of this market situation is actually quite accurate: the market interpreted Huang Renxun's statement as "copper and light will continue to be used," which directly shifted the sector from "anything that benefits will rise" to a differentiated trading approach of "who truly benefits and who was just hyped up by the hype."

If we shift our focus back to individual stocks, this divergence becomes even more pronounced.

• Lumentum (LITE.M ) continues to be a topic of discussion in the market not only because it belongs to the "light" sector, but also because, in investors' minds, it is no longer just a concept stock, but has been included in the list of stocks that "have the potential to truly enter the next generation of interconnected systems." Because of this, even if short-term sentiment fluctuates, the market's understanding of it is more likely to remain focused on "changes in pace" rather than "disappearing logic." Barron's noted that on March 17th, Lumentum was actually one of the few representative stocks that managed to close higher.
• Coherent (COHR.M ) is positioned somewhat similarly to Lumentum, but the market will not price it in the same way. This is because once the sector shifts from "telling big stories" to "delivering tangible results," investors will be more concerned with where each company will actually benefit, how long it will take to realize those benefits, and whether expectations have already been over-inflated. It's not that it lacks direction, but rather that it's more likely to enter a phase of "logical analysis, but requiring a recalculation of the timeline." Barron's recap for the same day noted that Coherent's performance was significantly weaker than Lumentum's that day.
• Ciena (CIEN.M ) is somewhat unique. Unlike some highly volatile names that are easily driven up and then crashed by sentiment, it's more like a stock that prompts the market to consider "how optical networks will truly be deployed in the future." Its significance goes beyond simply riding a trending topic; it serves as a reminder that if large-scale AI infrastructure is to be continuously upgraded in the future, the final competition won't be about just individual components, but about how the entire network capability evolves. Barron's GTC after-hours summary also categorized Ciena as "relatively stable within the optical chain."
• Applied Optoelectronics (AAOI.M ) is more like a typical example of high volatility in this market rally. Such stocks are often the easiest to be quickly driven up by the market when sentiment is positive; conversely, unless the catalyst is strong enough to further push up expectations, they are also the first to face selling pressure. Its volatility precisely illustrates one thing: when the market begins to doubt whether "realization will be slower than expected," the first to be hit are often those stocks that have risen the fastest and have the highest expectations. Barron's report on March 17 also placed AAOI on the side of pressure.
• Credo (CRDO.M ) highlighted another crucial shift following the GTC: simply being associated with "copper" doesn't automatically guarantee a benefit. Jensen Huang clarified that while copper won't disappear immediately, this doesn't mean all copper chain companies will be instantly rewarded by the market. Funds will be scrutinizing more closely: which copper connection segment will benefit most? Short-range? AEC? Or another segment? Barron's analysis shows Credo also experienced significant volatility in this market sentiment, demonstrating that the market no longer accepts the simplistic narrative of "as long as you're on the right theme, everything will rise."

OFC venue photos source: publicly available news images

Ultimately, when looking at these stocks together, the most noteworthy point is not which one goes up or down, but that the market has begun to treat them as assets with different positions, different profit-taking paces, and different degrees of certainty .

In the previous stage, everyone was more willing to put them all in the same basket, but since GTC, that basket has been being broken up. AI interconnectivity is not a choice between "light and copper", but a division of labor question of "who should use it first and where".

Ultimately, Huang didn't deny the existence of optical communication technology; he simply didn't present it in the way the market wanted to hear. Therefore, after GTC, the market is no longer just looking at "whether there's a story," but rather "who is closer to implementation and who is closer to realization." This is why, despite being in the same field of optical communication, stock performance has begun to diverge significantly.

In the previous stage, many companies could be traded together in the same basket; but from now on, the market will look at things more carefully: who will benefit first, who will validate their strategies first, and who will simply be driven up by emotions.

The real differentiation has only just begun.

The direction of the light hasn't changed; what has changed is how the market views this line.

Previously, people were more willing to pay for imagination first. In the future, the market will pay more attention to realization. So what will really differentiate us in the future is not who can tell a better story, but who can turn the story into performance earlier.

Let's wait and see.