Anthropic's IPO filing unexpectedly became a catalyst for the rebound in optical stocks, with Lumentum surging 8.2% to lead the S&P.

Three main factors are behind the sharp rise in optical stocks. First, Anthropic's IPO filing and a combined $40 billion in funding from Meta and SpaceX have eased fears that spending on AI may have reached its peak. Second, the U.S. Federal Communications Commission (FCC) may limit imports of optical modules, creating a potential $3.2 trillion market opportunity for U.S. companies. Third, supplies of indium phosphide, an important material used in semiconductors, are becoming tighter. Together, rising demand, possible import restrictions, and limited supplies are creating a period of unusually strong growth for domestic manufacturers.

Anthropic filed its IPO prospectus, unexpectedly triggering a strong rise in optical stocks.

On Monday, Lumentum Holdings rose 8.2%, the biggest gain in the S&P 500. Coherent gained 5.8%, and Ciena rose 4.9%. Three positive developments helped optical stocks recover after earlier selling pressure: AI spending data supported confidence in the sector, investors expected possible policies to protect domestic suppliers, and signs pointed to tighter supplies of important semiconductor materials.

Anthropic officially filed its IPO prospectus on Monday. Its financial results helped improve investor confidence in chipmakers and related hardware companies. MarketWatch reported that Amit Daryanani, an analyst at Evercore ISI, said interest in optical stocks was starting to return after the sector's sharp drop last week. Many investors had been waiting for Anthropic to file its S-1 registration statement, seeing the filing as a sign that it might be time to start buying these stocks again.

Other data from the AI sector also point to continued strength. Meta Platforms announced plans to raise money by selling shares, while SpaceX pledged $40 billion in funding for chips and other AI hardware. Daryanani said these developments send a clear message that AI investment remains strong. At the same time, the FCC may restrict imports of certain optical modules early next year. Reports from Asian markets also point to slower growth in the supply of important semiconductor materials. Both developments strengthen the case for investing in U.S. optical component makers.

Anthropic's financial results support AI spending and boost investor confidence.

Anthropic's IPO filing has given investors an important look at how much money is being invested in AI infrastructure. According to reports, Daryanani said the AI sector remains "relatively healthy" in terms of its underlying business performance. Anthropic's financial results have also helped lift chip-related stocks more broadly.

Meta's announcement about raising money through share sales, along with SpaceX's plan to raise up to $40 billion for AI hardware, shows that major technology companies are continuing to invest heavily in AI infrastructure. Taken together, these developments suggest that spending on AI has not yet reached its peak. They also support the continued importance of optical connections, which help data move quickly between parts of data centers.

Possible FCC restrictions could change supply chains and help domestic manufacturers.

Daryanani also highlighted how expected FCC policies could change the optical components industry. Citing industry experts, he said the FCC is expected to restrict imports of optical modules from certain foreign suppliers early next year. These restrictions could effectively prevent those suppliers from selling next-generation 3.2T optical modules in the U.S. market.

The possible effects of this policy could be significant. At present, suppliers in certain regions make about two-thirds of these components worldwide. If the restrictions take effect, they could make it harder to build AI infrastructure in the short term. However, U.S. manufacturers and suppliers in allied countries could gain new business as buyers shift their orders. Companies such as Lumentum and Coherent may benefit from these changes.

Slower growth in indium phosphide supplies is supporting prices and expectations for demand.

News from Asia over the weekend was another important reason for Monday's rise in optical stocks. Daryanani said there were signs that the supply of indium phosphide (InP), an important semiconductor material, was growing more slowly. This suggests that some suppliers are having trouble increasing production enough to meet current demand.

This supply problem comes as AI is rapidly changing how the optical industry develops new technology. Daryanani explained that traditional optical technology cycles usually last about five years. But AI has sped up the pace of change, with data transmission rates now improving nearly every year. This means major increases in the speed at which data can be sent are happening much more often.

Faster data transmission and the growing number of connections needed by AI-powered data centers will continue to increase demand for optical components. Data centers need more connections, which also raises demand for lasers, including products made with InP. However, expanding production and getting products certified both take time, so supply will not be able to catch up with demand right away. As a result, supplies are likely to remain tight for an extended period.

Daryanani concluded that these factors "jointly underpin the sustained demand for suppliers capable of expanding capacity and delivering products at the required pace." This suggests that domestic manufacturers with the ability to increase production and deliver products on time, including Lumentum and Coherent, are likely to keep benefiting during this period of strong demand.