Optical and networking stocks ranked among Monday's leading decliners, with Ciena, Lumentum and Coherent each closing down between 7.9% and 10%. One analyst said comments from Broadcom's CEO may have sparked the moves, while another said investors may have been giving back Friday's gains.
Ciena, Lumentum and Coherent closed down 10%, 9.8% and 7.9%, respectively, as optical and networking stocks ranked among Monday's leading decliners. Cisco, Corning and Lumen Technologies fell 2.6%, 6% and 4.3%, while Marvell Technology lost 3.4%.
The selloff followed major gains. Shares of Lumentum and Coherent are up 516% and 148%, respectively, in the past year.
Broadcom CEO's remarks hit AI names
Morningstar analyst Martin Szumski said commentary from Broadcom CEO Hock Tan may have sparked the moves. At a panel in Singapore, Tan said capital was the biggest bottleneck in the AI buildout.
Photonics companies rely heavily on committed spending from hyperscalers, Szumski explained, so Tan's comments could point to a shift away from continued all-out hyperscaler spending. He added: "anything but good news is prone to drag them downward", according to MarketWatch.
Motley Fool reported that Tan also said many investors set very extreme expectations and that enterprises are using AI tokens mostly in an experimental manner that may not be economical.
Lumentum gives back Friday's surge
Lumentum fell 9.8% on Monday to $995.41. Last week, CEO Michael Hurlston said in a Bloomberg interview that the company was nearly sold out through 2029, sending shares to an all-time high.
Mizuho's Daniel O'Regan noted that the optical category outperformed on Friday after those bullish demand comments, and wrote that the group could be giving back Friday's gains.
Reflexivity president Giuseppe Sette told MarketWatch the moves did not signal a crack in optical demand. He said investors may instead have reacted to a joint demo by Lumentum, Astera Labs and Corning at the Open Compute Project Global Summit that the market had already priced in.
Wider AI selloff
Monday also brought a broader selloff of AI stocks, which MarketWatch said could be tied to several factors. One was investor Steve Eisman's comment that over 65% of the S&P 500 is tied to the AI trade, so the index may be less diversified than investors realize.
Sources: MarketWatch, The Motley Fool
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