Lumentum's 8.2% Jump Led the S&P 500. Anthropic's IPO Filing Helped

Lumentum Holdings closed up 8.2% on Monday, the biggest gain in the S&P 500, as optical stocks staged a comeback from the prior week's selloff. Coherent, another optical connectivity maker, finished up 5.8%. Ciena climbed 4.9%.

The rally wasn't random. Evercore ISI analyst Amit Daryanani pointed to "renewed interest" in the optical sector following last week's declines, and he named the catalysts behind it. Each one carries a number, a date or a named player.

What did Anthropic's IPO filing change?

Anthropic filed its S-1 for its initial public offering on Monday, and its financials generally gave chip stocks a lift. Daryanani said many investors had likely been waiting for that filing before piling back into the AI trade. The filing answered a question the market had been holding until it got real numbers.

Earnings across the AI sector so far also look "relatively healthy from a fundamental perspective," he said.

Two more signals landed the same day. Meta Platforms announced an equity raise, and SpaceX committed $40 billion in financing for chips and other AI hardware. To Daryanani, that combination told investors the AI trade has "ongoing durability."

Why could FCC rules reshuffle the supplier map?

Daryanani also flagged an expected move from the Federal Communications Commission: limits on imports of optical transceivers from foreign suppliers early next year. The decision "would effectively remove Chinese suppliers from the U.S. market" for next-generation 3.2T optical transceivers, he said.

The scale matters. China makes about two-thirds of these components, Daryanani said, citing an expert. Restricting that supply would challenge AI deployment. But it would also hand a clear advantage to U.S. manufacturers and allied suppliers, he said — which is precisely the camp Lumentum, Coherent and Ciena sit in.

What did the InP news out of Asia signal?

Over the weekend, reports from Asia pointed to a potential slowdown in supply growth for Indium phosphide, or InP, a semiconductor material. Daryanani called it another key driver of Monday's move.

The read: Chinese suppliers are struggling to ramp up enough InP capacity that meets current speed requirements. That tightens supply in a market where demand keeps climbing.

Why does the optics cycle run faster now?

The traditional optics cycle lasts about five years, Daryanani said. AI has compressed it. He cited "near yearly increases in lane speeds" — the rate at which data travels — where the industry once waited half a decade between step changes.

That acceleration feeds directly into demand. Faster lane speeds and the growing number of interconnects required for AI data centers should keep driving optics demand, he said. More data-center connectivity needs will also lift demand for lasers, including InP-based ones.

Supply can't keep pace. Expanding manufacturing capacity and qualifying products takes time, which means supply will stay limited, Daryanani said.

Put together, "these dynamics support continued demand for suppliers that can add capacity and deliver products at the required speeds," he said.

What's the takeaway?

Monday's rally priced in three things at once: Anthropic's numbers, a coming FCC decision that could push roughly two-thirds of 3.2T transceiver supply out of the U.S. market, and InP capacity constraints at Chinese suppliers. If the FCC acts early next year as expected, U.S. optical makers stand to gain share in a market where demand is accelerating yearly and supply stays tight.