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In this episode of ETF Spotlight, I speak with Derek Yan, Senior Investment Strategist at KraneShares, about photonics and the KraneShares Photonic and Optical ETF (LUMA - Free Report).
Photonics is emerging as a potential solution to one of AI's biggest challenges: moving data quickly and efficiently between chips in data centers. It involves transmitting data through photons using optical fibers instead of the traditional method of sending it via electrons through copper wire.
NVIDIA (NVDA) has invested $2 billion each in photonics companies Lumentum Holdings (LITE - Free Report) and Coherent (COHR - Free Report). The AI giant also took a $2 billion stake in Marvell Technology (MRVL - Free Report) to collaborate on the development of silicon photonics and other technologies.
According to Goldman Sachs, the total addressable market for AI optical networking is expected to reach $154 billion by 2028. Rising investments and acquisitions also highlight the growing importance of photonics in scaling AI capabilities.
Many photonics stocks have skyrocketed this year and still look expensive despite the brutal AI selloff in July. Should valuations be a concern for investors?
The actively managed LUMA seeks to provide exposure to companies around the world that develop optical interconnects, transceivers, fiber-optic cables, and other light-based infrastructure.
The KraneShares Artificial Intelligence and Technology Public and Private ETF (AGIX - Free Report) holds a stake in Ayar Labs, a private company pioneering optical interconnects and co-packaged optics. NVIDIA, Advanced Micro Devices (AMD - Free Report), and Intel (INTC - Free Report) have all invested in the company.
Other photonics ETFs include the Corgi Lithography & Semiconductor Photonics ETF (EUV - Free Report), Tuttle Capital Pure Play Photonics ETF (FOTO - Free Report), and Tema Photonics & Optical ETF (LAZR - Free Report).
Video Length: 00:25:55
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