RALLİ AVCISI

$LITE just delivered an incredible quarter. Revenue reached $1.263 billion, up 136.5% year over year. Non-GAAP EPS was $4.57 and non-GAAP operating margin hit 42.3%. The next-quarter outlook was even stronger: revenue near $1.6 billion, operating margin above 45%, and a second major NPO/CPO win backed by more than $5 billion in purchase commitments. Demand for lasers and optical interconnects is clearly not the issue. The market is focused on the deal structure. The $MRVL acquisition uses a fixed exchange ratio of 4.5 Marvell shares for every Lumentum share. The $1,132 figure was the implied value when the deal was announced, not a guaranteed cash value. With $LITE around $536 on Friday, the gap mostly reflects the drop in Marvell’s share price, the time until closing, and deal risk. The business is still performing. Holding Lumentum now also means holding a claim on future Marvell shares, so the value moves with $MRVL.

A lot of people are asking the same questions about $COHR’s new supply agreement with Guangzhi Technology’s subsidiary: Why this supplier? Why six-inch wafers? And how many companies can actually produce six-inch InP substrates at the required quality and scale? Jim Anderson gave a useful clue on the earnings call. In ultra-high-power lasers, especially 400 mW CW lasers, Coherent sees only one real competitor and very few others operating at the same level. That helps explain why six-inch InP matters so much. Coherent’s advantage is the depth of its photonics stack. It covers light generation, lasers, fiber transmission, optical assemblies, and detection. Very few companies control that much of the signal chain. The agreement is still a letter of intent, not a final purchase contract. Guangzhi’s controlled subsidiary, Xianrui Technology, expects to supply at least $601 million of six-inch InP substrates to Coherent’s plants in Switzerland and Sweden from 2027 through 2029. Final terms, orders, and export permits still matter. That is why this six-inch platform is strategically important for both sides.

$COHR jumped more than 13% in one session. Three things drove the move. First, the quarter and outlook beat expectations. Revenue reached $2.37 billion, up 50% year over year. Data Center & Communications grew 79%. 800G shipments kept scaling, 1.6T continued to ramp, and the next-quarter revenue outlook moved up to $2.55–$2.75 billion. Second, Coherent signed a major five-year PhotonLink agreement with an estimated value of about $20 billion. The program covers a broader optical solution anchored by 400 mW CW lasers, with revenue expected to start ramping in early 2028. Alongside the $NVDA relationship, it gives the market a clearer view of Coherent’s value as an independent photonics platform. Third, the stock was coming off a sharp selloff while the capacity barrier remained intact. Internal InP output doubled year over year and is still not enough to cover demand. Coherent plans to more than double it again by the end of 2027. That vertical integration supports both supply control and future margin improvement.

$NIXT’s return can be split into two pieces: gains from valuation recovery and gains from revenue and margin improvement. Based on the attribution used here, more than half of the operating-improvement contribution came from $LITE. Lumentum accounted for 7.6 of the 14.5 percentage points in that bucket, or roughly 52%. Against the fund’s reported 2026 return in this analysis, that works out to about 4.7 points of contribution. The key is that NIXT did not chase Lumentum after the rally had already started. It owned the stock when the market had largely given up on it, then held through the recovery. 1. Lumentum fell out of the top 1,000 U.S. companies by market value during 2023–2024. That fits the fund’s deletions strategy, which targets companies removed from major large-cap universes after a steep decline. Fiscal 2024 revenue fell 23%, the company lost about $550 million, and operating cash flow dropped to roughly $25 million. The stock fell from about $106 at the end of 2021 to around $44 in April 2024. That is exactly the kind of setup the strategy looks for: a neglected company that has been pushed out of a major index. 2. Lumentum also passed the quality screen. The rules remove the weakest 20% of candidates. Buybacks helped its shareholder-distribution score, while convertible issuance worked against it. The detailed company score is not public, but Lumentum stayed in the eligible group. 3. The fund owned it from the start. In the first disclosed portfolio dated September 30, 2024, Lumentum had a 0.91% weight. 4. The rebalance rules allowed the position to ride. Lumentum was still below the size cutoff at the April 2025 rebalance and remained in the portfolio at roughly an equal weight. Over the following year, AI optical demand took off and the stock rose from around $59 to roughly $902. Because the strategy rebalances only once a year, it did not trim the winner along the way. By the time Lumentum no longer qualified at the 2026 rebalance, its weight had grown sharply. The stock later pulled back, so the exit timing also helped. How should investors think about NIXT? The strategy is not designed to identify one future superstar. It owns a broad group of companies the market has discarded and waits for a few of them to catch a powerful recovery cycle. That is how a deletions strategy is supposed to work, but nobody knows in advance which holding will become the next Lumentum or how far it will run. Even when Lumentum made a strong contribution, the fund could still lag the broader market in other periods. The simple takeaway: NIXT is a diversified small- and mid-cap value portfolio with some built-in upside from turnarounds. The long-term record is still short, so it is worth following rather than treating one great winner as proof the strategy always works.

I just listened to Lumentum's CEO discuss the AI selloff and Marvell's all-stock acquisition. The timing could hardly have been worse. Lumentum fell close to 40% last week as investors worried about data-center capex and then had to digest the $MRVL stock deal at the same time. The CEO still believes the combined company can create long-term value. The strange part is that customer demand and order visibility continue to improve while the public market is selling AI-related names aggressively. The biggest complication is the structure: each $LITE share converts into 4.5 $MRVL shares. As Marvell's stock falls, the value received by Lumentum holders falls with it. The companies expect the deal to close in the first half of 2028, subject to shareholder approval and regulatory reviews in the U.S. and other jurisdictions. His conviction has not changed. Lumentum reviewed Marvell's financials and new programs during due diligence and liked the long-term opportunity. That is why the board preferred stock consideration and continued ownership in the combined business. Both CEOs have experience completing difficult regulated acquisitions. Even so, the next major test is the long approval process.

Here is my view, plain and simple: No matter which party is in power, the U.S. cannot afford to slow down on AI. This is a global race, and any pause gives competitors in Europe, India, and elsewhere more room to catch up. When these big tech stocks rise, issuing debt becomes easier and financing gets cheaper. That gives the companies more money to keep building compute. I do not expect AI spending to stop. The selloff across optical networking, storage, and semiconductors looks heavily driven by fear and leverage. The moves over the last two days have been brutal. Time will tell. Maybe it takes a month or two, maybe six. Looking back, this semiconductor pullback could end up feeling a lot like the tariff-war selloff. My approach: I am trimming exposure in other areas and putting more focus on AI hardware, but only at a pace I can handle. I am also trying to build more cash flow, keep spending under control, and use this pullback carefully instead of chasing every bounce. ⚠️ Not financial advice.

$LITE just reported a huge quarter, but the cash-flow picture still deserves a closer look. Revenue reached $1.263 billion, up 136.5% year over year. Profit and EPS looked great on paper. But the company is still spending heavily to expand capacity. Cash, cash equivalents, and short-term investments fell by about $759 million during the quarter. Some of last year’s large GAAP loss also came from non-cash accounting tied to convertible-note conversions, not a collapse in the core business. This is the expensive part of the cycle. Revenue is growing fast, but factories, equipment, inventory, and working capital absorb a lot of cash. That is a common issue across the optical-hardware group. The stock has also been hit hard after a huge run, as the market quickly cuts the valuation it is willing to pay. There is another layer now: $MRVL has announced a definitive all-stock deal to acquire Lumentum. That raises real questions about customer relationships, supply-chain choices, dilution, and regulatory approval. The market’s view is pretty simple: the growth is real, but perfect execution is already expected—and that is a high bar. ⚠️ Not financial advice.

Near-term issues are real. $AAOI feels like the market is treating the capacity delay as weaker demand. U.S. expansion is getting slowed by power and construction, so the year-end 800G/1.6T monthly capacity target got cut from around 650k to 500k+. Demand on the other side didn’t change. They actually raised the end-of-2027 target from about 930k to over 1M units per month. The LTA actually improves 1.6T visibility. Right now the biggest question to me is when the capacity catches up.

$CRDO Credo just cleared an important milestone. Two optical-telemetry specifications developed with $ORCL were approved by the Open Compute Project. In plain English, the standards help operators spot weak optical links before they cause an AI cluster outage. That matters as networks move toward NPO and #CPO, where every link has to stay reliable at much larger scale. Credo is also moving ahead with 1.6T transceivers and the SRMO short-reach optics workstream for high-speed links inside and between racks. That keeps it closely tied to the hyperscaler ecosystem. The market is not rewarding the news right now. Investors are focused on whether cloud providers slow their capacity buildouts and push long-term orders further out, so the whole optical group remains under pressure. ⚠️ Not financial advice.