Why Ciena, Lumentum and other optical stocks were among the market's biggest losers on Monday

By Hannah Pedone

The sharp moves could partly be a reaction to recent cautious commentary on AI spending

Shares of Lumentum fell nearly 10% on Monday.

Artificial-intelligence stocks came under pressure Monday, with optical and networking stocks among the leading decliners.

Shares of Ciena (CIEN), Lumentum Holdings (LITE) and Coherent (COHR) closed down 10%, 9.8% and 7.9%, respectively, while shares of Cisco Systems (CSCO), Corning (GLW) and Lumen Technologies (LUMN) fell 2.6%, 6% and 4.3%. Marvell Technology's stock (MRVL) lost 3.4%.

As demand for optical and networking components has skyrocketed this year, shares of the companies that produce those components - like lasers, wiring and electronics - have staged major gains. Shares of Lumentum and Coherent, for instance, are up 516% and 148%, respectively, in the past year.

Giuseppe Sette, president and co-founder of the AI investment analytics platform Reflexivity, told MarketWatch that Monday's market action didn't signal any "crack in optical demand, which remains booked out for years."

Rather, investors could be reacting to a demonstration by Lumentum, Astera Labs (ALAB), and Corning (GLW) on Monday at the 2026 Open Compute Project Global Summit in San Jose, Calif.

At the AI hardware conference, the companies did a joint demo of a method to use optical networking in AI data-center racks. But "the market had already priced that showcase in, so the event became an exit point rather than a catalyst," Sette said.

See also: The murky AI milestone that has some of the industry's leading voices increasingly on edge

Morningstar analyst Martin Szumski said that commentary from Broadcom (AVGO) CEO Hock Tan may have also sparked Monday's stock moves. At a panel in Singapore, Tan said that capital was the biggest bottleneck in the AI buildout.

Photonics companies' revenues rely heavily on committed capital spending from hyperscalers, or large cloud companies that provide computing power, Szumski explained. And Tan's comments could point to signs of a shift away from "continued all-out hyperscaler spending," he added.

"With many of the photonics stocks having run up significantly over the last 18 months, anything but good news is prone to drag them downward," he said.

Daniel O'Regan, managing director for equity trading at Mizuho, pointed out in a note that the optical category was a "massive outperformer" on Friday, following bullish comments on component demand from the CEO of Lumentum. The group of stocks could be giving back Friday's gains, he wrote.

Furthermore, there was a broader selloff of AI stocks on Monday, which could be tied to a number of factors, including Tan's remarks as well as commentary last week from investor Steve Eisman.

In an interview, Eisman said that over 65% of the S&P 500 SPX is now tied to the AI trade, and therefore the index may be less diversified than investors realize.

-Hannah Pedone

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10-12-26 1646ET