Huang Renxun's "Ignition" Failed: GTC Brought Up Optical Communications, Why Did the Sector Cool Down Instead?

Many people thought that this time at GTC, Jensen Huang would completely ignite optical communications.

After all, this sector has been hot for a long time. From CPO to silicon photonics, from optical modules to high-speed interconnects, the market has almost projected all imaginable AI infrastructure upgrades onto this area. Coincidentally, OFC 2026 is also happening in the same week—the technical conference runs from March 15 to 19, and the exhibition from March 17 to 19. One is NVIDIA outlining its roadmap, and the other is the entire optical communication industry showcasing its strength. Naturally, the excitement has been pushed to a peak.

So before Jensen Huang took the stage, the market wasn’t expecting just an ordinary speech but rather a spark. What everyone wanted to hear wasn’t “the future direction is fine,” but a clearer statement: In the next phase, optical will be the main theme.

Unfortunately, Jensen Huang didn’t deliver that version.

GTC Jensen Huang’s speech scene Source: The Business Journals

Why did Jensen Huang talk about optical, but the market still didn’t buy it?

Recently, the reason optical communication has been so hyped isn’t just because it sounds advanced, but because the logic is so straightforward—AI clusters are getting bigger and bigger, data transmission pressure is increasing, and copper will inevitably hit a bottleneck. So, isn’t it time for optical to take over?

This story is too easy to believe. And because it’s so simple, the market naturally pushes forward, thinking that since the direction is so clear, the realization shouldn’t be too far off.

Before GTC, many investors weren’t really debating “can optical do it,” but rather betting early on whether Jensen Huang would make this topic more aggressive than expected.

Data center cabling Source: The Fiber Optic Association

The issue isn’t whether he mentioned optical.

Of course he did, and he did so quite prominently. But what Jensen Huang actually emphasized was that optical is definitely important, but copper won’t exit the scene in the short term. “NVIDIA plans to continue using copper-based connections and updated optical technologies in upcoming platforms (including Vera Rubin Ultra and future systems).”

What the market wanted to hear was that optical would soon dominate across the board. That small difference was enough to cause a market reversal.

This is also the most awkward part for the market because stocks are often most afraid of not being as optimistic as expected, rather than outright bad news.

The issue isn’t whether “optical is promising,” but whether “it will be realized now.”

The most easily misunderstood point this time is that many interpret it as “optical is no longer viable” or “copper has won.”

Actually, that’s not the case.

A more accurate way to put it is the long-term logic of optical hasn’t changed; what has changed is the market’s perception of how quickly it will be realized. NVIDIA’s official technical blog describing the Vera Rubin platform already clearly explains this: larger-scale systems will use direct optical connections for rack-to-rack links, but many internal rack connections will still rely on copper spine and pre-terminated copper cables.

Simply put, inside many racks, copper remains dominant; but at larger scales and across racks, the importance of optical begins to become more apparent.

So, what GTC truly corrected isn’t the direction but the timeline. The market previously bought into this sector with a very big future in mind; now it’s starting to ask: Who will realize this future first, and when?

Data center equipment/system display Source: Cisco Blogs

Market shift from “full optical” to “beginning to differentiate”

Because of this, after the speech, the market didn’t move as “the entire sector surging together,” but rather a shake-up followed by differentiation.

Barron’s summarized this well: the market interpreted Jensen Huang’s statement as “copper and optical will both continue to be used,” which shifted the sector from a “buy on optical” theme to a more nuanced “who benefits, who is just riding the hype” differentiation.

Looking at individual stocks, this differentiation becomes even clearer.

• Lumentum (LITE.M) continues to be discussed repeatedly not just because it belongs to the “optical” sector, but because it’s no longer just a concept stock in investors’ minds. It’s now on the list of companies that could truly enter the next-generation interconnect systems. Because of this, even if short-term sentiment fluctuates, market understanding tends to stay at “pace changes,” not “logic disappears.” Barron’s noted that on March 17, Lumentum was one of the few stocks that still closed higher;
• Coherent (COHR.M) is somewhat similar to Lumentum, but the market’s valuation isn’t exactly the same. When the sector shifts from “big story” to “practical implementation,” investors become more concerned about which company benefits at which level, how soon it will realize, and whether expectations have been overly optimistic. It’s not that they lack direction, but they are more likely to enter a phase of “logical but needing recalculated timelines.” Barron’s review on the same day showed Coherent’s performance was noticeably weaker than Lumentum;
• Ciena (CIEN.M) is somewhat special. Unlike some highly volatile names that are easily pushed up and down by sentiment, Ciena is more about prompting the market to think about “how will the future optical network truly unfold.” Its significance isn’t just riding a hot word but reminding everyone that if large-scale AI infrastructure continues to upgrade, the final competition won’t just be about a component story but about how the entire network capability advances. Barron’s post-GTC summary categorized Ciena as a relatively stable player in the optical chain;
• Applied Optoelectronics (AAOI.M) is a typical high-volatility representative in this rally. Stocks like this tend to be quickly pushed up in good sentiment but also the first to face selling pressure if catalysts aren’t strong enough to sustain expectations. Its volatility illustrates a key point: when the market doubts whether realization will be slower than expected, the names that surged the fastest and had the highest expectations are often the first to be hit. Barron’s on March 17 also listed AAOI as under pressure;
• Credo (CRDO.M) reveals another important shift after this GTC: it’s not just about “benefiting from copper.” Jensen Huang clarified that copper won’t exit immediately, but that doesn’t mean all copper connection companies will be rewarded right away. Investors will start asking more detailed questions: which segment of copper connectivity benefits most? Short-distance? AEC? Other links? Barron’s review shows Credo’s stock also experienced significant volatility, indicating the market no longer accepts the simple narrative of “rising together on theme.”

OFC conference scene Source: Public News Photos

Ultimately, looking at these stocks together, the most notable point isn’t who’s rising or falling, but that the market is beginning to see them as assets with different positions, different realization timelines, and different levels of certainty.

Earlier, everyone was more willing to lump them into the same basket, but after GTC, that basket is being unpacked. AI interconnect isn’t a “choose between optical and copper” dilemma but a “who uses what where” division of labor.

At its core, Jensen Huang didn’t deny optical; he simply didn’t deliver the version the market most wanted to hear. After GTC, the focus isn’t just on “whether there’s a story,” but on “who is closer to implementation, who is closer to realization.” That’s why, even within the same optical communication sector, stock performances are beginning to diverge significantly.

In the previous phase, many companies could be grouped together for trading; but from now on, the market will scrutinize more closely: who benefits first, who verifies first, and who was just pushed up by sentiment initially.

True differentiation has only just begun.

The direction of optical hasn’t changed; what has changed is how the market views this sector.

In the past, investors were more willing to buy into the imagination first; now, the market will focus more on actual realization. The real gap will be determined not by who can tell the best story but by who can turn the story into performance earlier.

Let’s wait and see.