AI Networking and Optics: NVLink, Ethernet, CPO — 2026-10-29
Arista Networks reported a record quarter, signaling a decisive shift toward open Ethernet fabrics powered by Broadcom silicon, effectively challenging Nvidia’s InfiniBand dominance in AI clusters. Meanwhile, Chinese optical component leaders like Innolight and Eoptolink announced orders stretching to 2028–2030, driven by the rapid adoption of 1.6T transceivers and CPO technology.
AI Networking and Optics: NVLink, Ethernet, CPO — 2026-10-29
Top developments
Arista’s Ethernet Surge Undermines InfiniBand Monopoly
Arista Networks reported its first-ever quarter with revenue exceeding $3 billion, marking a 38% year-on-year growth. The company raised its 2026 revenue outlook to approximately $12.6 billion, citing accelerating demand for its Etherlink AI switches, which are now deployed by more than 100 customers. This growth underscores the industry's pivot toward open Ethernet standards, leveraging Broadcom’s silicon to compete directly against Nvidia’s proprietary InfiniBand stack.
Chinese Optics Makers Report Orders Through 2028
Innolight (Zhongji Innolight) announced that its orders are fully booked through 2028, while other reports suggest capacity commitments extending to 2030. This backlog is driven by the surge in 1.6T optical transceiver demand for AI data centers. Innolight’s net profit for the first half of 2026 grew by 241.7% year-on-year to 13.65 billion yuan, with 95% of revenue coming from overseas clients. The company is currently mass-producing 400G, 800G, and 1.6T modules while advancing 3.2T and CPO/NPO technologies.
CPO and 1.6T Transceivers Hit Production Milestones
Nvidia’s Spectrum-X Photonics switches, featuring co-packaged optics (CPO), have moved into production with early customer deployments beginning. This validates CPO as a critical technology for reducing power consumption and increasing bandwidth density in next-generation AI clusters. Concurrently, sample shipments of 1.6Tbps optical transceivers have commenced, with a significant ramp-up projected for the second half of 2026.
IMEC Report Calls for Rethinking Optical Interconnects
A new report from IMEC emphasizes that the unprecedented bandwidth demands of AI require bringing optics closer to silicon. The report argues for a fundamental rethinking of the optical interconnect roadmap, moving beyond traditional pluggable optics toward integrated solutions like CPO to sustain the scaling of AI networks.
Local view
Chinese financial media, including Sina Finance and FX168, are closely tracking the "CPO concept" stocks, with shares of companies like JPT (Jiepu Te) rising over 15% in response to supply shortage news. Analysts note that the bottleneck for optics makers is no longer assembly capacity but upstream chip and packaging capabilities. Innolight is scheduled to release its Q3 financial report on October 30, with market expectations for significant year-on-year growth in both revenue and net profit.
Context & numbers
- Arista Revenue: >$3 billion in the latest quarter, up 38% YoY.
- Innolight H1 2026 Profit: 13.65 billion yuan, up 241.7% YoY.
- 1.6T Transceiver Demand: Projected to exceed 10 million units by 2026.
- Eoptolink Buyback: The company announced a share buyback plan of 800 million to 1 billion yuan, reflecting confidence in its cash flow from 800G and 1.6T module sales.
On the radar
- Innolight Q3 Earnings: Scheduled for October 30, 2026. Investors are watching for confirmation of 1.6T shipment volumes and CPO progress.
- Arista Earnings Volatility: Despite record results, Arista stock has dipped nearly 10% in the past month, trading at a premium multiple that leaves little room for error in future guidance.
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