Optics Stocks Plunge as Traders Question AI Spending Sustainability
Shares of Coherent, Applied Optoelectronics, and Lumentum fell sharply on July 28, 2026, dropping 11%, 10%, and 9% respectively, amid growing trader skepticism about the sustainability of AI infrastructure spending. The selloff was triggered by Alphabet's Q2 2026 earnings report, which showed capital expenditures of $44.92 billion (double year-ago) and negative free cash flow of -$5.86 billion, raising concerns about returns on AI investment. The broader semiconductor sector also declined, with the iShares Semiconductor ETF (SOXX) falling 4%. Despite the downturn, all three optics stocks retain significant year-to-date gains (Coherent +28%, Lumentum +71%, Applied Optoelectronics +150%), suggesting profit-taking rather than fundamental deterioration. Celestica bucked the trend with 62% revenue growth, highlighting a contradiction between booming AI supply chain demand and trader narrative shifts.
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