Tower and Photonics Picks

Investors hunting for cheaper artificial-intelligence suppliers have turned to three less-visible names: Tower Semiconductor, Applied Optoelectronics, and Lumentum. (towersemi.com) The pitch starts with what these companies sell. Tower is a contract chipmaker for specialty analog and silicon photonics processes, while Applied Optoelectronics and Lumentum make the optical parts and transceivers that move data between servers, switches, and racks inside data centers. (towersemi.com) (sec.gov 1) (sec.gov 2) Tower’s latest results gave bulls fresh numbers to point to. The company reported record fourth-quarter 2025 revenue of $440 million on February 11, 2026, up 14 percent from a year earlier, and said full-year 2025 revenue rose to $1.57 billion from $1.44 billion in 2024. (towersemi.com) Tower also tied its case more directly to artificial-intelligence buildouts. On February 5, 2026, it said its silicon photonics platform was being used for 1.6-terabit data-center optical modules designed for NVIDIA networking protocols, and on March 25 it said it would expand 300 millimeter capacity in Japan. (towersemi.com 1) (towersemi.com 2) Applied Optoelectronics is the more direct optics bet. The company said on February 26, 2026 that fourth-quarter 2025 revenue reached $134.3 million, up from $100.3 million a year earlier, and full-year revenue climbed to $455.7 million from $249.4 million in 2024. (sec.gov) Its recent announcements have centered on faster links for larger artificial-intelligence clusters. Applied Optoelectronics said on March 9 it received its first volume order for 1.6-terabit data-center transceivers from a major hyperscale customer, and on March 23 and April 2 it disclosed new and upsized 800-gigabit transceiver orders from another major hyperscale customer. (ao-inc.com 1) (ao-inc.com 2) Lumentum is the larger, more established optics supplier in the group. It reported fiscal 2025 revenue of $1.645 billion on August 12, 2025, up from $1.359 billion in fiscal 2024, and said fourth-quarter revenue reached $480.7 million as demand for cloud products supporting artificial-intelligence data centers lifted sales of 800-gigabit modules, electro-absorption modulated laser chips, pump lasers, and narrow-linewidth laser assemblies. (lumentum.com) Lumentum has kept leaning into that message in 2026. Its investor page now describes the company as a supplier of optical and photonic technologies for artificial intelligence, cloud computing, and communications, and its newsroom lists a strategic partnership with NVIDIA and new products for scale-up and scale-out artificial-intelligence infrastructure at Optical Fiber Communication Conference 2026. (lumentum.com) (lumentum.com) The valuation argument is harder to verify than the operating data. Public market pages show Tower, Applied Optoelectronics, and Lumentum all trading on Nasdaq, but ratio figures such as price-to-earnings-growth can vary by vendor and can change quickly with analyst estimate revisions. (google.com) (finance.yahoo.com) (finance.yahoo.com) That leaves the core case resting less on a single multiple than on where each company sits in the supply chain. If artificial-intelligence spending keeps shifting from graphics processors alone to the lasers, transceivers, and specialty chip processes needed to connect them, these three names have all reported recent evidence that demand is already reaching their part of the market. (towersemi.com) (sec.gov) (lumentum.com)