These AI Stocks Will Make Millionaires By 2029

Ticker Symbol: YOU•Aug 24, 2026

Summary

Alex explains that as AI chips like Nvidia's Blackwell become more powerful, the bottleneck has moved to the network feeding them, as traditional copper wiring cannot handle the necessary speeds over distance. Alex focuses on the shift to optical networking and the critical role of indium phosphide (InP) lasers, which are replacing copper for inter-rack connections in data centers. Alex notes that there is a significant shortage of these specialized lasers, with the market expected to grow at a 30% compound annual growth rate through 2031. Alex highlights that both featured companies are backed by multi-billion dollar investments and purchase commitments from Nvidia.

Coherent (CHR): Alex notes that Coherent is vertically integrated, handling everything from the bare InP wafer to the finished 1.6T transceivers. Alex highlights their competitive advantage in moving to 6-inch wafers, which produces four times the chips at half the cost compared to the industry standard 2-4 inch wafers. Alex points out that Nvidia owns nearly 4% of Coherent and has a multi-billion dollar purchase agreement with them. Alex mentions that while Coherent spends heavily on capex—$14 for every $1 made—the management expects an 18-month payback period on these investments.

Lumentum (LIT): Alex describes Lumentum as a leader in electro-absorption modulated lasers (EMLs) that can switch on and off 100 billion times per second to encode data. Alex explains that Lumentum's products are essential for co-packaged optics, which move lasers closer to the chip to reduce power consumption by over 60%. Alex emphasizes Lumentum's 109% year-over-year revenue growth and high gross margins of 50.4%, signaling strong pricing power during the current laser shortage. Alex also clarifies that a recent massive net loss was a one-time non-cash charge and that the underlying business remains highly profitable.

Mentioned Stocks

CHR

Sentiment: BUYAction: BOUGHT

Reasoning: Alex identifies Coherent as a top pick because of its unique 6-inch wafer production capability, which significantly lowers costs and increases output during a global laser shortage. Alex highlights the company's vertical integration and the strategic backing of Nvidia, which includes a 4% ownership stake and multi-billion dollar purchase commitments. Alex acknowledges the high capex but believes the 18-month payback period makes it an excellent long-term investment.

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LIT

Sentiment: BUYAction: BOUGHT

Reasoning: Alex views Lumentum as a strong buy due to its explosive triple-digit revenue growth and high margins resulting from the indium phosphide shortage. Alex points out that Lumentum's EML technology is critical for reducing power consumption in AI racks, a major concern for data center operators. Alex notes that Nvidia invested $2 billion in Lumentum on the same day as Coherent, reinforcing its importance to the AI infrastructure supply chain.

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