NVIDIA commits $4B to advance optical technology for AI infra

Tech giant NVIDIA has committed $4 billion to advance optical technology for AI infrastructure through two multiyear strategic partnerships.

The massive investment is split between two major optical technology firms, Lumentum and Coherent, to ensure that the next generation of data centres can handle the immense pressure of AI workloads.

By weaving these partnerships into its long-term strategy, NVIDIA seeks to address a critical bottleneck in modern computing: the speed at which data moves between chips.

As part of the agreements, NVIDIA will invest $2 billion in Lumentum and $2 billion in Coherent. These funds are specifically earmarked for research, development, and expansion of manufacturing facilities within the United States.

These partnerships are significant as traditional electrical connections are becoming too slow and energy-hungry for the scale of modern AI. Meanwhile, the industry is shifting towards silicon photonics, a technology that uses light (photons) rather than electricity to transmit information across computer systems.

NVIDIA's founder and CEO Jensen Huang highlighted the scale of this transition while announcing the Lumentum deal. 

“AI has reinvented computing and is driving the largest computing infrastructure buildout in history. Together with Lumentum, NVIDIA is advancing the world’s most sophisticated silicon photonics to build the next generation of gigawatt-scale AI factories,” he said.

These 'AI factories' are essentially massive data centres designed to generate tokens, which are the basic units of data that AI models use to understand and create text or images.

What keeps these factories running efficiently are optical interconnects—high-speed links that use lasers to move data. This technology is essential for improving energy efficiency and making large-scale AI networks more resilient.

“This multiyear strategic agreement reflects our shared commitment to advancing the optics technologies that will power the next generation of AI infrastructure. In support of this collaboration, we are also investing in a new fabrication facility to increase capacity and accelerate innovation,” said Michael Hurlston, CEO of Lumentum.

Meanwhile, Coherent is leveraging its relationship with NVIDIA that spans two decades.

“This strategic relationship underscores Coherent’s role as a key enabler of next-generation AI data centre infrastructure. We are proud to expand our 20-year relationship with NVIDIA by increasing their access to include multiple product families to help them build the AI data centres of the future,” said Jim Anderson, CEO of Coherent.

Power of compute

The scale of these deals, which include multibillion-dollar purchase commitments for laser components and optical networking products, shows how much NVIDIA relies on its partners to maintain its leadership in AI.

Huang emphasised the fundamental shift in the industry while discussing the Coherent partnership.

“Computing has fundamentally changed. In the age of AI, software runs on intelligence with tokens generated in real time by AI factories for every interaction and every context. With Coherent, NVIDIA is pioneering next-generation silicon photonics to enable AI infrastructure at unprecedented scale, speed and energy efficiency,” he remarked.

By securing these advanced components and manufacturing rights, NVIDIA is building a fortified supply chain to support the global expansion of AI.

Huang recently highlighted that “in this new world of AI, compute equals revenues,” as the world’s most valuable company posted strong financial results for the fourth quarter and full fiscal year of 2026.

“Without compute, there is no way to generate tokens. Without tokens, there is no way to grow revenues. So in this new world of AI, compute equals revenues,” the NVIDIA chief said during the earnings call.

For the fourth quarter ended January 2026, the company achieved $68.1 billion revenue, a 73% increase from the previous year. For the full fiscal year 2026, the company's total revenue reached $215.9 billion, up 65% from a year ago.

The tech firm has invested $30 billion in OpenAI’s recent funding round of $110 billion at a pre-money valuation of $730 billion.