Keysight Tech

Nomura Securities: Global optical laser chip eco-system and competitive landscape

InP Wafer

AXT $AXT(AXTI.US)

Sumitomo Electric $5802.T

JX Advanced Metals $5016.T

Coherent $Coherent Corp.(COHR.US)

Lumentum $Lumentum(LITE.US)

Epi Wafer

IQE $IQE.L

Landmark Optoelectronics $3081.TW

VPEC $2455.TW

Coherent $Coherent Corp.(COHR.US)

Lumentum $Lumentum(LITE.US)

Sumitomo Electric $5802.T

Wafer Equipment

Aixtron $AIXA.DE

Veeco $Veeco Instruments(VECO.US)

Taiyo Nippon Sanso $4091.T

CW/EML Laser

Lumentum $Lumentum(LITE.US)

Coherent $Coherent Corp.(COHR.US)

Sumitomo Electric $5802.T

Mitsubishi Electric $6503.T

SiPho Foundry

Tower Semiconductor $Tower Semicon(TSEM.US)

GlobalFoundries $GlobalFoundries(GFS.US)

TSMC $Taiwan Semiconductor(TSM.US)

Chip Equipment

FormFactor $Formfactor(FORM.US)

Keysight Technologies $Keysight Tech(KEYS.US)

Anritsu $6754.T

📢 𝗝𝗨𝗦𝗧 𝗜𝗡: $NVIDIA(NVDA.US) NVIDIA Expands Agent Toolkit With AI Physics and Engineering Libraries

👉 𝗞𝗲𝘆 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀:

➤ 𝗡𝗩𝗜𝗗𝗜𝗔 expands 𝗔𝗴𝗲𝗻𝘁 𝗧𝗼𝗼𝗹𝗸𝗶𝘁 with 𝗣𝗵𝘆𝘀𝗶𝗰𝘀𝗡𝗲𝗠𝗼 and 𝗖𝗨𝗗𝗔-𝗫 libraries.

➤ New toolkit enables autonomous 𝗔𝗜 𝗲𝗻𝗴𝗶𝗻𝗲𝗲𝗿𝘀 for chip and system design.

➤ 𝗣𝗵𝘆𝘀𝗶𝗰𝘀𝗡𝗲𝗠𝗼 adds AI physics skills for simulation and engineering.

➤ Updated 𝗖𝗨𝗗𝗔-𝗫 libraries deliver accelerated solvers and quantum chemistry capabilities.

➤ 𝗡𝗲𝗺𝗼𝘁𝗿𝗼𝗻 𝟯 𝗨𝗹𝘁𝗿𝗮 leads open models in agentic RTL coding.

➤ 𝗖𝗮𝗱𝗲𝗻𝗰𝗲, 𝗦𝗶𝗲𝗺𝗲𝗻𝘀, and 𝗦𝘆𝗻𝗼𝗽𝘀𝘆𝘀 are adopting the expanded toolkit.

➤ 𝗦𝗮𝗺𝘀𝘂𝗻𝗴 uses NVIDIA technologies for lithography and thermal-stress analysis.

➤ 𝗧𝗦𝗠𝗖, Samsung, and Synopsys integrate 𝗰𝘂𝗘𝗦𝗧 for quantum chemistry workloads.

➤ 𝗞𝗲𝘆𝘀𝗶𝗴𝗵𝘁 uses 𝗰𝘂𝗗𝗦𝗦 to accelerate electromagnetic simulations by up to 𝟭𝟬𝘅.

👉 𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀:

➤ Positions 𝗡𝗩𝗜𝗗𝗜𝗔 beyond AI chips into engineering software infrastructure.

➤ Expands NVIDIA's ecosystem across semiconductor design and industrial AI.

➤ AI agents could significantly reduce chip development time and costs.

➤ Broader enterprise adoption strengthens long-term demand for NVIDIA computing platforms.

👉 𝗘𝘅𝗽𝗲𝗿𝘁 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁:

𝗧𝗶𝗺𝗼𝘁𝗵𝘆 𝗖𝗼𝘀𝘁𝗮, Vice President and General Manager of Computational Engineering at NVIDIA:

“Engineering has reached an inflection point. AI can now work with tools of physics, simulation and design. With NVIDIA Agent Toolkit, developers can build agentic engineers that reason using physics, run complex simulations and generate high-fidelity data to become a new engine for innovation in chip and system design.”

Morgan Stanley: Optical vs Copper

How do you think about the optical scale up opportunity in 2027, 2028, 2029, etc, and how does that relates to the Nvidia ecosystem and roadmap?

A: We believe a small scale out adoption next year, with small volumes accounting for 10-15% penetration with scale out. We do think there are some low adoption with CPO until Feynman in 2029. Small, single digit adoption of CPO in 2028 and really scaling in 2029.

You took your TAM to $73B, 4x from a year ago, talk about the drivers of that and how that compares to consensus and buy side out there?

A: Driven by CapEx data points being 2x we were expecting last year, that is one vector of growth. The other is the cluster sizes being discussed are the biggest rivers of scale up network . We have gone from 8 to 72, then from a couple 100s to 1000s in the next couple generations. This acts as a multiplier to scale up multiplier.

Talk about the exposure among Lumentum, Coherent, and Corning. Are there nuances between who is more exposed, less exposed?

A: For CPO within scale out, it is generally positive for Lumentum. Doesn't necessarily changed a whole lot for Corning. With Coherent, they have to balance it out with transceiver business they have. For Lumentum it is the most positive because of the one customer they have on the transceiver side being google and they are not going to be adopting CPO. For CPO within scale up, it is opportunity for all 3. This is where copper gets replaced with fiber and lit up by lasers and optical engines made by Coherent an Lumentum. In terms of overall exposure, Lumentum has a bigger catalyst because of larger AI/DC revenue. It would be incremental for both Coherent and lumentum. Lumentum #1, Coherent or Corning #2.

Tell me about the Corning Glass Bridge announcement that got the stock excited?

A: This is not a new announcement. It was a paper they released in 2025 and a presentation they did that refocused the market on this technology. It is already part of the $10B photonics target the company discussed couple of months ago.

In terms of catalyst for optical space, OCP (Open Compute Project) coming in October has gone popular. What are you expecting to hear from this?

A: We think this will be a catalyst because it provides more exposure into hyperscaler behavior. OCP will give us a chance to see hyperscalers roadmap, it will focus on CPO, NPO adoption and the vendors involved.

Copper is still the story for 2026 and 2027. We have seen this continued enthusiasm for ASICs. How is copper well positioned for this dynamic? Who are the well positioned beneficiaries?

A: Copper life can be extended with use of retimers and better SerDes. Copper has a lot of runway before switching to optics. We will likely see a hybrid environment before going to 100% optics. A large debate in scale up is what fabric and protocol will become dominant other than NVLINK as we get into new XPUs and alternatives to Nvidia GPUs ramping. A big debate here is between UALink and ethernet. Ethernet is dependent on Broadcom's new ASICs ramping in 2H2027 into 2028, we think Broadcom will have opportunity to bundle XPU solutions with networking portfolio and are very well positioned in ethernet. On UALink, this is high optionality for Marvell and Astera Labs. Astera has the scale up switch for Trainium 3, this is a PCIe based solution. We think customers will want to move to UA Link eventually.

You consider Keysight as an agnostic winner in R&D, regardless of the copper vs optical timeline. Explain your thesis and why do you see it pulling ahead?

A: Keysight really ways in multiple ways when it comes to AI. First, it benefits from different types of architectures being discussed which all need to be tested with their equipment in labs. Second, when you move to higher speeds (400g laser vs 200g), it requires more complicated testing. Third, when architectures change frequently, like every 2 years, that boosts their business. The variety of architectures being tested matters.

$Astera Labs(ALAB.US) $NVIDIA(NVDA.US) $Broadcom(AVGO.US) $Marvell Tech(MRVL.US) $Credo Tech(CRDO.US) $Semtech(SMTC.US) $Amphenol(APH.US) $Keysight Tech(KEYS.US) $Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Corning(GLW.US) $Alphabet(GOOGL.US)

Value gap & trap of Photonics as it stands now.

$Corning(GLW.US) - A clear moat on glass. They lead in both Data Center for high speed data transfer & Gorilla glass. A clear moat. Verdict: Value gap.

$Coherent Corp.(COHR.US), $Lumentum(LITE.US), $Keysight Tech(KEYS.US) - A loyal sub-ordinates with strong guidance. They need to prove but heading in right direction.

$Ciena(CIEN.US) $Applied Optoelectronics(AAOI.US) - Extremely overvalued, no moat. Verdict: Value trap. Morning

There is a lot to prove for many of these companies. Some will stay, some will go. Time will tell us.

$Keysight Tech(KEYS.US) | 𝐊𝐞𝐲𝐬𝐢𝐠𝐡𝐭: Wells Fargo maintains 𝐎𝐯𝐞𝐫𝐰𝐞𝐢𝐠𝐡𝐭, raises 𝐏𝐓 𝐭𝐨 $𝟑𝟗𝟎

Analyst sees AI infrastructure complexity driving sustained double-digit growth potential.

When AI hallucinations turn out right:

I have an AI scheduled task running at 6am PDT on all my LLMs (prompt shown) and Gemini hallucinated that $Keysight Tech(KEYS.US) would beat. Even got the Sales number right. See the timestamp. Obviously I ignored it but maybe I need to pay attn 😅

🚨 After-market buzz!

$8X8(EGHT.US) $Red Robin Gourmet(RRGB.US) $Keysight Tech(KEYS.US) $Cava(CAVA.US) $Roblox(RBLX.US) $AMC ENT(AMC.US) $Toll Brothers(TOL.US) $Viavi Solutions(VIAV.US)

$Keysight Tech(KEYS.US) Ripping on a Double Beat 🔥

Q2 Adj EPS: $2.87 vs $2.32 est

Q2 REV: $1.717B vs $1.706B est

🟩 +9.33%