Coherent, Applied Optoelectronics, Lumentum Drop Amid Doubts Over AI Spending
Shares of Coherent (COHR), Applied Optoelectronics (AAOI), and Lumentum (LITE) fell by 11%, 10%, and 9% respectively on Tuesday amid growing investor skepticism about the sustainability of hyperscaler artificial intelligence capital expenditures. The decline appears to be driven more by profit-taking than company-specific news, as all three stocks have seen significant gains this year—Coherent up 28%, Lumentum up 71%, and Applied Optoelectronics surging 150% YTD. The selloff was triggered in part by Alphabet’s (GOOGL) Q2 report showing $44.9 billion in capital expenditures, a doubling from the previous year, alongside negative free cash flow of -$6 billion for the quarter and an expected full-year capex budget between $195–$205 billion. This has raised concerns about whether AI investments will yield sufficient returns to justify current valuations. The broader semiconductor sector also felt pressure as the iShares Semiconductor ETF (SOXX) dropped 4%. However, Celestica (CLS), an electronics manufacturing services provider for AI infrastructure, bucked the trend with a strong Q2 report and raised its full-year outlook.
Tickers: $AAOI $CLS $COHR $GOOGL $LITE $SOXX