Deutsche Bank Identifies Optical Networking as Next AI Wave

Deutsche Bank analyst Gianmarco Conti initiated coverage of eight hardware stocks on September 1, 2026, identifying optical networking companies as the primary beneficiaries of the next phase of artificial intelligence development. Conti describes the initial AI buildout as a "compute story" and the subsequent wave as a "connectivity story," driven by the demand for hardware capable of moving light within data centers.

Conti issued buy ratings for Lumentum Holdings, Coherent, Arista Networks, Cisco Systems, and Hewlett Packard Enterprise. He identified Lumentum and Coherent as his highest conviction picks because of their essential laser components. Nvidia has invested $2 billion in each of these two companies to secure hardware commitments.

Other ratings include a buy for Cisco, noted for its vertical integration across the hardware stack, and a buy for HPE for its networking subsidiaries and liquid-cooling technology. Conti assigned hold ratings to Dell Technologies, Ingram Micro Holding, and A10 Networks.