GF: NVIDIA Corporation's CPO ramp-up faster than expected; Lumentum (LITE.US) and Semtech (SMTC.US) poised to benefit.

GF SEC stated that NVIDIA Corporation's (NVDA.US) co-packaged optics (CPO) scale-out is advancing faster than expected, which should benefit supplier Lumentum (LITE.US). GF Securities maintains its "Buy" rating on Lumentum. GF SEC analyst Alicia Xia said in an investor report on Tuesday, "To support this ramp-up, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) has expanded CPO testing/inspection capacity, particularly adding Insertion 2/3 equipment," "Key components such as FAU are also progressing well, thanks to improved multi-plug yield. At the system level, we believe major component suppliers are in place, enabling cleanroom-level system integration starting from early September. We now expect NVIDIA Corporation's CPO switch shipments to reach 15k/16k/30k/100k in 4Q26/1Q27/2Q27/2027, respectively." According to GF Securities data, Lumentum's estimated revenue from CPO and near-packaged optics (NPO) will see significant year-over-year acceleration between 2027 and 2028. In 2027, Lumentum is expected to generate $427 million in CPO laser revenue and $501 million in NPO laser revenue. By 2028, this forecast expands to $750 million for CPO and $2.55 billion for NPO. Xia noted, "The NVL576-based scaled CPO/NPO system is expected to begin adoption in 2H27E, with each NVSwitch tray equipped with two switch boards, each board carrying four ASICs, paired with four 3.2T optical engines (OE)/ASIC," "We reiterate our view that CPO (QM5 + 4 OEs) and NPO (QM5 + 4 OEs, using a socket approach) are advancing in parallel; given NPO's maturity, our view of full NPO adoption at NVL576 launch is consistent with consensus expectations. The next thing to watch is Feynman, and our supply chain research shows it is also being developed in both CPO and NPO variants; packaging-side visibility indicates that CPO (QM6, with six 6.4T OEs) remains on track." GF Securities also gave Semtech (SMTC.US) a "Buy" rating, citing its role in NPO scale-out, which is expected to significantly improve its earnings per share (EPS) figures by 2028. It is projected that after contributing $0.47 in 2027, this business will contribute $3.03 to its EPS by 2028.