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Credo Technology Group and Coherent both stand to gain from the AI data centre buildout, but Zacks Investment Research rates Coherent the better buy. Coherent carries a Zacks Rank of #2 (Buy), while Credo holds a #3 (Hold). Credo makes high-speed connectivity products, and expects more than 85% year-over-year revenue growth in fiscal 2027. Its risks include customer concentration, with four customers generating roughly 84% of first-quarter revenue, and a cash balance that fell to $764.3 million after the DustPhotonics acquisition. Coherent makes lasers, transceivers and optical materials. It expects first-quarter fiscal 2027 revenue of $2.2 billion to $2.4 billion, though capital expenditure rose to $556 million last quarter. Year to date, Coherent shares are up 42.6% and Credo's are up 24.5%. Credo trades at 23.41 times forward earnings, against 24.73 for Coherent.

TrendForce forecasts VCSEL demand to reach 650 million units by 2031. Article by: TrendForce. TrendForce projects 38% annual growth as six suppliers develop VCSEL-based near-packaged optics for high-speed data center interconnects. Demand for vertical-cavity surface-emitting lasers (VCSELs) used in near-packaged optics (NPO) is expected to rise as AI data centers require higher-bandwidth, lower-power interconnects, according to TrendForce. In its 2027 Infrared Sensing and Optical Communication Market Trend report, the market research firm projects VCSEL sales will reach 650 million units by 2031, representing a compound annual growth rate (CAGR) of 38% from 2025 to 2031. Several VCSEL NPO solutions are expected to launch in 2027 and 2028. Lumentum, Furukawa Electric, Coherent, Broadcom, ams OSRAM and HiSilicon are developing VCSEL NPO technologies for scale-up networks connecting processors and other components within AI data centers. As transmission rates approach 1.6 Tbps, signal attenuation in copper cables becomes more pronounced. Active electrical cables (AECs) use retimers to compensate for signal degradation, but higher data rates are expected to increase interest in optical interconnects for short-reach links. Supplier strategies differ by VCSEL wavelength. Coherent, Broadcom, ams OSRAM and HiSilicon are developing solutions based on established 850nm VCSELs paired with photodiodes, targeting aggregate bandwidths of up to 3.2 Tbps. However, chromatic dispersion could limit further increases in bandwidth and transmission distance. Lumentum and Furukawa Electric are pursuing higher-cost 1,060nm VCSELs, while Coherent is also planning to adopt the wavelength. TrendForce identifies high fiber-coupling efficiency, low dispersion, low relative intensity noise and performance at elevated temperatures as potential advantages of these devices. VCSEL NPO is also competing with Micro LED co-packaged optics (CPO), which integrates arrays of optical emitters and receivers with application-specific integrated circuits (ASICs) or GPUs to increase transmission density and reduce power consumption. Micro LED CPO could eventually approach theoretical limits for energy consumption per bit, but mass transfer, optical fiber compatibility and coupling efficiency remain challenges. Its supply chain is also less mature. By comparison, VCSEL NPO benefits from a more established supply chain, lower power requirements and greater maintenance flexibility, according to TrendForce. Both 850nm and 1,060nm implementations could support high-density links in AI data centers. Further development will focus on improving optical performance and increasing individual VCSEL data rates from 100G to 200G. Suppliers are also developing smaller Micro VCSEL devices measuring 100-200μm, which could enable denser multi-channel arrays and higher aggregate bandwidth.

Major suppliers bet on VCSEL near-packaged optics. Thursday 8th October 2026 VCSEL demand to reach 650m units by 2031, says TrendForce TrendForce's latest report '2027 Infrared Sensing and Optical Communication Market Trend', shows growing interest in VCSEL-based near-packaged optics (NPO) for data transmission in data centre networks. Major companies like Lumentum, Furukawa Electric, Coherent, Broadcom, Ams Osram, and HiSilicon are investing heavily in R&D, becuase of the technology's benefits of low power usage, easier maintenance, and a mature supply chain. Several VCSEL NPO solutions are expected to launch between 2027 and 2028. Coupled with rising demand for short-reach optical transceivers, this trend is projected to boost VCSEL sales to 650m units by 2031, growing at a CAGR of 38 percent from 2025 to 2031. In scale-up network architectures for AI data centres, active electrical cables (AECs) primarily rely on multiple re-timers to mitigate data loss and signal attenuation. However, as transmission speeds advance into the 1.6 Tbps era, high-frequency electrical signal attenuation over copper cables increases significantly. This is expected to accelerate the transition toward optical interconnect technologies for short-reach transmission, including architectures such as VCSEL NPO and Micro LED CPO. Looking at supplier strategies, Lumentum, Furukawa Electric, Coherent, Broadcom, Ams Osram, and HiSilicon are developing VCSEL NPO solutions to capture future opportunities in scale-up networks. Coherent, Broadcom, Ams Osram, and HiSilicon are adopting mature 850nm VCSELs paired with photodiodes to achieve aggregate bandwidth of up to 3.2 Tbps, though chromatic dispersion will limit further improvements in transmission distance and bandwidth. Lumentum and Furukawa Electric have adopted higher-cost 1,060nm VCSEL solutions, while Coherent is also planning to adopt this approach. They offer extremely high fibre-coupling efficiency, low dispersion, low relative intensity noise (RIN), and strong performance at elevated operating temperatures, making them better suited to future increases in transmission speeds. TrendForce notes that microLED CPO and VCSEL NPO require arrays of emitters and receivers to be integrated with ASICs/GPUs to achieve ultra-low power consumption and extremely high transmission density. Although Micro LED CPO offers long-term potential to approach the theoretical limit of energy consumption per bit, the technology continues to face challenges involving mass transfer, optical fibre compatibility, and coupling efficiency. Its supply chain also remains under development. Compared with microLED CPO, VCSEL NPO offers more mature commercial conditions in terms of power consumption per bit, maintenance flexibility, and supply-chain readiness. Both 850 nm and 1,060 nm solutions can address the high-density transmission requirements of AI data centres. By offering a balance between performance and practical feasibility, VCSEL NPO has emerged as a highly competitive option for scale-up optical interconnect architectures at this stage. Future VCSEL NPO development will focus on further improving overall performance. On the optical side, suppliers will seek to optimize the combination of VCSEL wavelengths and optical fibre technologies. At the chip level, development will focus on increasing the data rate of individual VCSELs from 100G to the 200G standard, as well as developing smaller Micro VCSELs with individual device sizes of 100-200 μm. Higher-density, multi-channel arrays can then be used to further increase transmission bandwidth. Overall, says TrendForce, continued improvements in performance, technology maturity, and supply-chain readiness are strengthening the competitive advantages of VCSEL NPO and accelerating the development of barriers to entry around the technology.