Memory was the first major AI bottleneck, as seen in explosive moves in Micron Technology Inc. (NASDAQ:MU) and SanDisk Corp. (NASDAQ:SNDK).
Photonics could be the next one, and a new exchange-traded fund just opened for business to play it.
The Corgi Lithography & Semiconductor Photonics ETF (CBOE: EUV) launched on May 6 as the first U.S.-listed fund built around the photonics theme.
It holds $18.4 million in assets so far, a fraction of the nearly $7 billion that flooded into the Roundhill Memory ETF (NASDAQ:DRAM) in roughly a month.
But the lukewarm reception is hiding a more interesting story.
Fifteen of EUV’s forty holdings are already up more than 100% year-to-date. Three are up more than 300%. One is up more than 650%.
Why Photonics, Why Now?
Photonics is the use of light to do work that electrons used to do.
In an AI data center, that means using lasers and optical fiber to move data between graphics processing units instead of copper wires, which are running into hard physical limits at the bandwidths Nvidia Corp. (NASDAQ:NVDA) clusters now demand.
Think of it as the plumbing for AI. When hyperscalers wire up hundreds of thousands of GPUs into a single training cluster, the bottleneck is no longer the chip. It is the cable between the chips.
That is why optical transceivers, photonic integrated circuits, co-packaged optics and pluggable optics have become the most crowded supply-constrained corner of the AI buildout.
Nvidia has poured billions into photonics suppliers to lock down capacity. Orders extend 18 months out at some firms, well above historical norms of 12 months.
According to estimates made by Corgi Funds, the issuer behind EUV, the silicon photonics market is projected to grow from $2.8 billion in 2025 to $10.7 billion by 2032 at a 21% compound annual growth rate, driven by AI data center demand.
15 Names Inside EUV ETF Are Already Up Triple Digits In 2026
Inside EUV’s basket sits a roster of stocks that have already gone vertical.
The top performers year-to-date among EUV’s components include AXT Inc. (NASDAQ:AXTI), up 651.7%, Applied Optoelectronics Inc. (NASDAQ:AAOI), up 440.1%, and Lightwave Logic Inc. (NASDAQ:LWLG), up 391.7%.
The list continues with:
- Aehr Test Systems Inc. (NASDAQ:AEHR) at 379.1%
- Ultra Clean Holdings Inc. (NASDAQ:UCTT) at 227.6%,
- Viavi Solutions Inc. (NASDAQ:VIAV) at 199.7%
- Lumentum Holdings Inc. (NASDAQ:LITE) at 169.2%
- Ciena Corp. (NYSE:CIEN) at 146.8%
- FormFactor Inc. (NASDAQ:FORM) at 136.7%
- Corning Inc. (NYSE:GLW) at 126.8%
- nLIGHT Inc. (NASDAQ:LASR) at 123.4%
- POET Technologies Inc. (NASDAQ:POET) at 116.9%
- Veeco Instruments Inc. (NASDAQ:VECO) at 115.1%
- MACOM Technology Solutions Holdings Inc. (NASDAQ:MTSI) at 111.8%
- GlobalFoundries Inc. (NASDAQ:GFS) at 106.6%.
Fifteen names, all north of 100% in a little over four months.
Table: 15 Best-Performing EUV Holdings Year-To-Date
| # | COMPANY | PRICE | WEIGHT | YTD RETURN |
|---|---|---|---|---|
| 01 | AXT Inc. | $122.90 | 2.57% | +651.68% |
| 02 | Applied Optoelectronics Inc. | $188.28 | 2.16% | +440.10% |
| 03 | Lightwave Logic Inc. | $15.93 | 0.25% | +391.67% |
| 04 | Aehr Test Systems Inc. | $96.72 | 1.30% | +379.05% |
| 05 | Ultra Clean Holdings Inc. | $82.99 | 1.50% | +227.64% |
| 06 | Viavi Solutions Inc. | $53.40 | 2.25% | +199.66% |
| 07 | Lumentum Holdings Inc. | $992.37 | 4.61% | +169.23% |
| 08 | Ciena Corp. | $577.15 | 4.24% | +146.78% |
| 09 | FormFactor Inc. | $132.02 | 1.88% | +136.68% |
| 10 | Corning Inc. | $198.24 | 5.30% | +126.83% |
| 11 | nLIGHT Inc. | $83.81 | 1.74% | +123.43% |
| 12 | POET Technologies Inc. | $13.73 | 1.05% | +116.90% |
| 13 | Veeco Instruments Inc. | $61.46 | 1.61% | +115.05% |
| 14 | MACOM Technology Solutions Inc. | $362.76 | 3.20% | +111.79% |
| 15 | GlobalFoundries Inc. | $72.15 | 0.22% | +106.62% |
The Bottleneck Logic
So why is the light layer outrunning the chip layer?
There are at least three reasons.
First, demand is structural. Hyperscaler capital expenditure is on track to grow 67% year-over-year in 2026, according to Stifel analyst Ruben Roy.
Every dollar of GPU capex eventually requires interconnect, and most of it now requires optical interconnect.
Second, supply is constrained. Indium phosphide lasers, the building block of high-speed transceivers, sit in a vertically integrated supply chain dominated by a handful of names.
Coherent Corp. (NYSE:COHR) and Lumentum are the two firms with the in-house laser chip capacity needed to scale into 800G and 1.6T transceivers, the bandwidth tier hyperscalers are now ordering at scale.
Third, optical replaces copper at a fixed pace. Once a hyperscaler commits a cluster to optical interconnects, the parts ship for the life of that cluster. The revenue is recurring in a way GPUs are not.
The combination is driving year-over-year revenue growth that some companies have not posted since the dot-com fiber boom.
Lumentum just reported fiscal third-quarter revenue of $808.4 million, up 90.1% year-over-year, and guided fourth-quarter revenue to a range of $960 million to $1.01 billion. The midpoint would represent year-over-year growth of nearly 100%.
Why EUV Is Not A ‘Pure’ Photonics Play
ETF.com senior ETF analyst Sumit Roy has questioned whether EUV is really a photonics ETF at all.
Roy indicated that EUV’s top holdings tilt toward the semicap and foundry story rather than the data center interconnect bottleneck driving the photonics rally.
The fund’s top five holdings as of May 12 are Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) at 9.52%, ASML Holding NV (NASDAQ:ASML) at 7.97%, Corning at 5.19%, Lam Research Corp. (NASDAQ:LRCX) at 4.98% and Applied Materials Inc. (NASDAQ:AMAT) at 4.84%.
Together those names sit ahead of the photonics pure-plays in the ranking.
Of the top five, only Corning has Optical Communications as the clear AI photonics driver. The rest are general semicap names benefiting from AI but not from the photonics bottleneck specifically.
Taiwan Semiconductor benefits from leading-edge node demand. ASML benefits from foundry capex. Both are using light. Neither is the AI photonics pure-play that drove Lumentum, Coherent and Applied Optoelectronics to multi-bagger status this year.
“That’s a different cycle from the photonics bottleneck driving Lumentum, Coherent, and Applied Optoelectronics—stocks that sit further down the holdings list,” Roy said.
Roy also noted that TSM, ASML, LRCX, AMAT and KLA Corp. (NASDAQ:KLAC) together make up over a quarter of the VanEck Semiconductor ETF (NASDAQ:SMH), so EUV’s top holdings duplicate exposure investors can already get in broader semiconductor funds.
Three other photonics ETFs have been recently filed with stricter pure-play definitions, including the KraneShares Optical AI Infrastructure ETF, which would require at least 50% of revenue or gross profit from optical infrastructure across transceivers, photonic integrated circuits, fiber assemblies and optical networking systems.
None of the chip and semicap names that dominate EUV’s holdings would clear that test.
Photo by VL-PhotoPro via Shutterstock
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