AI Networking and Optics: NVLink, Ethernet, CPO — 2026-10-25

Top developments

NVIDIA Spectrum-X Photonics Enters Production

NVIDIA has moved its Spectrum-X Ethernet Photonics switches into production, with early customer deployments beginning. This shift validates Co-Packaged Optics (CPO) as a viable technology for scaling AI networks, addressing power and bandwidth constraints in large clusters. The move signals a transition from pluggable optics to integrated optical solutions for next-generation AI factories.

Chinese Optical Makers Report Orders Through 2028

Innolight (Zhongji Innolight), a leading Chinese optical module manufacturer, announced on October 23 that its orders are fully booked through 2028. The company, along with peers like Eoptolink, confirmed normal operations and strong demand driven by AI data center construction. The primary bottleneck is no longer module assembly but upstream chip and packaging capacity, as demand shifts from 800G to 1.6T and 3.2T optical speeds.

Networking Stocks Rally on AI Demand

Networking stocks saw significant gains in mid-October, with Ciena and Arista climbing 4% amid a broader tech rebound. Investors are favoring companies positioned for AI-specific infrastructure over legacy enterprise networking players like Cisco. Arista Networks is preparing to report Q3 results on November 3, with expectations of revenue exceeding its guidance of $3.3 billion, reflecting the intense demand for AI-scale-out Ethernet switches.

Broadcom’s AI Networking Roadmap

Broadcom continues to solidify its position in AI networking, with analysts highlighting its $115 billion expected AI semiconductor revenue for 2027. The company’s focus on high-performance Ethernet switches and co-packaged optics is seen as a key differentiator against competitors. Recent financial analyses suggest Broadcom’s valuation may still have room to grow as hyperscalers diversify away from single-vendor solutions.

Local view

Chinese media outlets like Sina and Sohu are closely tracking the "optical module bottleneck" narrative. Reports from October 22-23 emphasize that while Chinese manufacturers dominate global optical module production, the strategic advantage lies in upstream components like DSPs and optical chips. The narrative highlights Innolight’s dominance in 1.6T silicon photonics modules, with a market share exceeding 60%, and its role as a primary supplier to NVIDIA and Google.

Context & numbers

• Order Backlogs: Innolight’s orders are confirmed through 2028, with capacity sold out through 2029.
• Financial Guidance: Arista Networks expects Q3 2026 revenue of approximately $3.3 billion, with adjusted operating margins between 48% and 49%.
• Broadcom Outlook: Broadcom is targeting $115 billion in AI semiconductor revenue for 2027.

On the radar

• Arista Q3 Earnings: Arista Networks will report third-quarter results on November 3, 2026. Investors are watching for updates on scale-up Ethernet adoption and any changes in guidance due to supply chain constraints.
• 1.6T Ramp-Up: Industry sources indicate that 1.6T transceiver shipments are ramping up in the second half of 2026, with early samples already in circulation among major hyperscalers.