Policy favorable factors and mass production expectations resonate as the CPO concept defies the market and surges! 11 stocks are expected to see their performance double.

On April 3 in the early trading session, the CPO concept rallied against the trend. Deko Li capped the limit-up by 20cm. Luxin Technology rose by more than 10%, and Hengtong Optoelectronics surged to hit the daily limit. Multiple other stocks, including Jiguang Technology, Robotek, Fiberhome Technologies, and Changxin Bochao, also followed the move.

CPO sector catalysts have been coming one after another recently

This week, the CPO concept sector has continued to strengthen, driven by multiple factors that have converged to create a catalytic effect.

On the policy front, yesterday the General Office of the Ministry of Industry and Information Technology released a notice titled《关于开展普惠算力赋能中小企业发展专项行动的通知》. It mentions promoting the deployment of technologies such as all-optical switching to reduce the network latency from compute-power application terminals to servers. It also calls for extending optical network equipment to user-side scenarios such as industrial parks. In addition, it urges in-depth implementation of the municipal/regional “millisecond computing”专项行动 to expand the coverage of the 1-millisecond latency ring in the city-level/metro area.

The《加快推进人工智能服务器产业链高质量发展行动计划》 recently issued by the Shenzhen Municipal Bureau of Industry and Information Technology is even more explicit. It states that the focus will be on developing high-rate, low-power silicon photonics modules, as well as CPO/LPO/NPO packaged optical modules, and pushing for breakthroughs and large-scale applications of core technologies such as high-end thin-film lithium niobate and high-end indium phosphide.

On the industry side, recently the Silicon Photonics Industry Alliance SiPhIA held a forum. TSMC said its silicon photonics integration platform COUPE is expected to achieve full volume production this year. In the industry, this is seen as an important milestone in the CPO industry moving from technology validation to commercial rollout.

Meanwhile, Nvidia recently announced that it will invest $2.0 billion into U.S. semiconductor company Marvell, bringing it into Nvidia’s AI ecosystem. The two sides will also cooperate on silicon photonics technology to help customers build AI compute infrastructure.

Earlier, Nvidia had made similar strategic “$2.0 billion” investment deals in Lumentum and Coherent, companies associated with the optical communications concept. At the GTC conference in March, this compute-intelligence giant announced that the world’s first CPO switch, Spectrum X, has been fully put into production, with expected batch shipments in the second half of the year.

At the company level, there are also positive catalysts. Robotek announced last night that its wholly owned subsidiary ficonTEC’s subsidiary has signed a new batch of contracts with a Nasdaq-listed company, with a contract amount of $35.70 million. This is an order for mass-production coupling equipment and services applicable to a plug-and-play silicon photonics technology route.

Worth noting is that this is the fifth time Robotek has disclosed that ficonTEC has won a major order since the start of this year. The total contract amount is RMB 1.02B, further confirming the sector’s high level of activity and favorable momentum.

CPO commercialization is getting closer and closer

CPO integrates the optical engine and the switching chip and XPU directly on the same substrate or in an intermediate layer. This shortens the path for transmitting electrical signals from a few centimeters to the millimeter scale, thereby significantly reducing signal attenuation, power consumption, and latency.

With global AI compute demand continuing to rise, traditional electrical interconnect technologies are gradually reaching their performance limits in terms of bandwidth and power consumption. CPO, thanks to its high integration and low-energy-consumption characteristics, has become an important technological direction for next-generation AI data center internal interconnects.

Although CPO technology is still in the early stage of commercialization, several overseas top manufacturers, including Nvidia, Broadcom, and Marvell, are actively investing in R&D, and the commercialization pace of the CPO sector continues to accelerate.

According to Western Securities, TSMC’s COUPE packaging platform is becoming the key foundation for CPO systems. For the CPO industry chain to mature, coordinated system-level design is required across the full set, including laser diodes, PICs, coupling and interconnection, thermal management, packaging, and so on. Before plug-and-play solutions and technology routes such as LPO and NPO become mainstream in CPO, they are still expected to serve as pragmatic options that match demand and enable faster rollout.

Guangfa Securities’ latest research report states that, as the next-generation technology for optical modules, with increasing requirements for data transmission efficiency in AI server interconnects, the industry trend is being further reinforced. Global leading manufacturers are actively exploring relevant technical routes and applications. It suggests focusing on companies that lay out key equipment such as CPO packaging and testing.

11 concept stocks are promising to see their earnings double

Oriental Fortune concept sector data shows that in the current A-share market, there are more than 40 stocks related to the CPO concept, with a total market cap exceeding RMB 3.4 trillion. Among them, InnoLight, New Soro, Luxshare Precision, and Tianfu Communication are leading by size. Hengtong Optoelectronics, Zhongtian Technology, and Huagong Technology also have market caps of over RMB 8B.

Since the beginning of this year, more than 70% of CPO concept stocks have recorded share-price gains. Stocks such as Hengtong Optoelectronics, Jiguang Technology, and Zhili Fang have already doubled. For several other stocks, including Ever-Green Ecotech, Robotek, Zhongtian Technology, and Tianfu Communication, the gains over specific periods have also been more than 50% each.

From the perspective of capital flows, according to 东方财富Choice data, in the most recent week, 14 CPO concept stocks received additional buys from leveraged funds. Among them, Tianfu Communication received a large amount of financing—RMB 676 million. Stocks including Fiberhome Communications and Hengtong Optoelectronics and Zhongtian Technology also saw net purchases from financing of over RMB 200 million each. For Yongding Shares, Fiberhome Technologies, Jept, and Tongtian Shares, the net financing purchases were all in the range of RMB 96 million to RMB 145 million.

As for future growth potential, based on predictions from two or more institutions, as many as 11 CPO concept stocks are expected to achieve double-digit-on-year earnings growth this year. Among them, institutions expect Cambridge Technology’s net profit this year to surge by more than 4 times year over year. Jiguang Technology is expected to deliver net profit growth of over 340%. For Deko Li, Aerospace Electric Devices, Voger Optics, and Robotek, their predicted net profit growth rates are all between 1.7 times and 2.4 times.

（Source: Eastmoney Research Center）