MACOM Technology Solutions is suddenly giving investors two numbers to think about: its stock has more than doubled over the past year, and its newest optical components push data rates toward another doubling.
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MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) announced a 3.2-terabit optical chipset on September 17 built around eight 448-Gbps PAM-4 channels. A day later, BMO Capital upgraded the shares to Outperform with a $335 target, arguing that a 36% decline from the May peak had compressed MACOM’s forward valuation to roughly 29 times earnings while data-center fundamentals remained intact.
That puts Coherent Corp. (NYSE:COHR) directly in the conversation because both companies supply the optical connectivity needed to keep larger AI clusters fed with data.
Faster GPUs Need Faster Networks
MACOM’s new platform combines drivers, photodiodes and transimpedance amplifiers for next-generation optical modules. The company says the components are already available, rather than merely a research roadmap.
The opportunity for MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is content growth. As links move toward 3.2T, higher-speed optical modules require more sophisticated analog and photonic components. A single supplier that can provide both transmit and receive building blocks can also reduce customer qualification work.
The catch is price. Even after the pullback BMO highlighted, MACOM has already been rerated around AI networking. Continued upside requires the new products to convert technical leadership into revenue faster than rivals.
Coherent Corp. (NYSE:COHR) brings much greater scale in data-center optics and has become one of the market’s better-known beneficiaries of AI networking demand. Scale can help Coherent capture broad volume as 800G, 1.6T and eventually faster links proliferate. It also makes the company more exposed if hyperscaler deployments or optical pricing soften.
Hedge funds moved in opposite directions
Insider Monkey’s Q2 data showed MACOM ownership rising to 59 hedge funds from 45 in Q1. Whale Rock Capital held about 989,000 shares after reducing its stake 16%. Coherent ownership fell to 105 funds from 114, although D. E. Shaw increased its position more than thirteenfold to roughly 1.64 million shares.
About 2.96 million MACOM shares were sold short at the August 31 settlement date, equal to roughly 3.9% of float with 2.4 days to cover.
The optical market does not need one winner. AI clusters require so much bandwidth that several suppliers can grow simultaneously. What MACOM’s new chipset changes is the comparison. A stock that spent years outside the center of the AI trade is now shipping components aimed directly at the next generation of links, and Wall Street has started paying attention.