Nvidia just made another pair of great AI bets

• Nvidia ( NVDA ) has invested $4B in laser company Lumentum ( LITE ), and Coherent ( COHR ), an optical transmission maker.

• Nvidia is targeting AI infrastructure bottlenecks as the industry shifts from copper wire to silicon photonics.

• An analyst named NVIDIA just named his top 10 AI stocks in 2010. Get it for free here.

Just when you thought Nvidia (NASDAQ:NVDA) and its legendary founder and CEO Jensen Huang have wrapped up their exciting AI deals, making another pair of GPU titan moves. Undoubtedly, all the investments across the AI ​​scene may make some stakeholders uneasy, especially as circularity introduces a more complex web of risks over time.

Does each deal increase the weight on the shoulders of AI juggernauts? Or is it just a way for both sides to save cash while working together to solve the world’s toughest problems?

Could deal-making act as a catalyst for wider adoption across industries as AI companies target new market verticals? Or they’ll just raise the bar of expectations even higher, essentially setting AI dealmakers up for even more disappointment when it becomes clear that the ROI isn’t there, at least in a time frame that’s acceptable to your average trader.

Read: The analyst who called NVIDIA in 2010 Just naming his top 10 AI stocks

However, I think the AI ​​boom is alive and well, but with the short-term hype gone, the big question is whether the long-term path is still there and whether it makes sense for investors to hit the buy button as the near-term is a bit bullish while the long-term is as exciting as ever.

While investors may be used to and perhaps bored with large language models (LLMs), I think there are still plenty of “ChatGPT moments” (like the one Jensen Huang sees as physical AI taking shape).

Even as companies try to avoid the feeling that they’re forcing AI to avoid the feeling that they’re not ready or willing to adopt it for everyday workflows, I think the technology will evolve to a point where users will go to AI, rather than having it come to them through a browser or something on the side.

In any case, Nvidia is a game of “picks and shovels” that wants to help companies position themselves in a way that users will choose (and hopefully pay for AI) the latest and greatest subscriptions. And, in that light, I expect Nvidia to make deals (big and small) while spreading its wings across industries and even geographies.

The latest pair of bets made by Nvidia may seem less significant, especially when you compare the non-stop deals the company has made in recent months. Still, as Nvidia looks to bet big on not only AI inference but infrastructure as well, as AI innovators go through significant hurdles, I think it’s time for Nvidia shares to start growing again.

In case you missed it, the GPU giant poured $4 billion (a pittance by Nvidia’s standards!) into photonics innovators. Lumentum (NASDAQ: LITE ) and Coherence (NASDAQ: COHR). As the industry scales up from copper wire to silicon photonics (think optical cable), two companies stand out as key providers of infrastructure that can help overcome many of the barriers to AI’s rapid development. The Lumentum is a high-power laser player, while the Coherent is an optical transmitter.

While a pair of high-tech innovators hold significant growth promise for AI infrastructure to become faster and more efficient, I’m not at all comfortable with following any name in ultimate power. They are too hot to handle here, especially as the tech trade loses some steam.

In any case, the transaction pair may not only be a great investment, but one that can help power the AI ​​revolution at a faster pace. However, the bet seems smart, but comes at a fairly high price of admission. Shares of both LITE and COHR have gone parabolic over the past year, and this is sure to raise concerns that such deals are adding more air to the AI ​​bubble.

Wall Street is pouring billions into AI, but many investors are buying the wrong stocks. The analyst who first identified NVIDIA as a buyback in 2010 — before its 28,000% run — has identified just 10 new AI companies that he believes can deliver returns beyond that point. One dominates the $100 billion equipment market. Bill addresses the single biggest obstacle to maintaining AI data centers. The third segment is a net play in the optical network market that is quadrupling. Most investors haven’t heard of half of these names. Get a free list of all 10 stocks here.