The boom of AI infrastructure investment is still heating up, and with the evolution of computing power systems to higher-speed interconnection, the optical module industry is ushering in a new round of technological upgrade window.
On July 17th, Goldman Sachs released the latest research report,The 12-month target price of Zhongji InnoLight was significantly raised from 1187 yuan to 2581 yuan, and the "buy" rating was maintained.Meanwhile, Goldman Sachs raised the company's 2026-2028 net profit forecast by 65%, 108%, and 119%, respectively.
Goldman Sachs believes,Nvidia's new generation AI server continues to upgrade, which is pushing the data center network from 800G to 1.6T rapidly, and begins to lay the foundation for 3.2T deployment. The global high-speed optical module market will also enter a new round of expansion cycle.
With its leading position in silicon photonics technology, its position as the world's largest optical interconnection solution provider and expanding production capacity, Zhongji InnoLight is expected to become the core beneficiary of this round of AI network infrastructure upgrades and further consolidate its global leading position.
Goldman Sachs raises earnings forecast, AI demand drives scale and volume, and profit margins continue to improve
The biggest change in this report comes from earnings estimates.
Goldman Sachs raised the revenue forecast of Zhongji InnoLight from 2026 to 2028 by 57%, 100% and 118% respectively, and the corresponding revenue reached 123.6 billion yuan, 249.6 billion yuan and 334 billion yuan; The net profit forecast for the same period was raised by 65%, 108% and 119% respectively.
Goldman Sachs believes,This round of profit forecast adjustment mainly comes from three aspects：
First, AI infrastructure investment continued to exceed expectations, and the demand for high-speed optical modules grew rapidly;
Second, the company's capacity expansion speed is significantly faster than the previous forecast, and it is expected that the overall capacity will more than double in 2026;
Third, in addition to the traditional pluggable optical modules, the company began to cut into new Scale-up markets such as optical engines, NPO/CPO and OCS optical switches, opening up new growth space.
In the meantime,With the continuous increase in the proportion of silicon photonic products and the release of scale effect, the company's gross profit margin is expected to further increase from 42% in 2025 to 50% in 2028, and its net profit margin will also rise to 33%.
AI Server Upgrade Drives Rapid Evolution from 800G to 3.2T
Goldman Sachs judged that the global optical module market is entering a new round of technology upgrading cycle.
The report estimates that the global optical module market size will grow from US$34.2 billion in 2025 to US$50.9 billion in 2026 and US$72.6 billion in 2027, and maintain a high level of approximately US$69.1 billion in 2028. Among them,The real growth drivers come from high-speed products above 800G.
Goldman Sachs expects:
The shipment of 800G optical modules will be approximately 34.18 million units in 2026, and will increase to 44.99 million units in 2027;
The number of 1.6T optical modules will reach 25.5 million in 2026, and rapidly jump to 45.72 million in 2027, becoming the mainstream of the market;
3.2T optical modules will officially enter the heavy volume stage in 2027, with shipments reaching 13.07 million units, and further increase to 28.16 million units in 2028.
The core force driving this upgrade comes from the Nvidia AI Server Roadmap.
Goldman Sachs expects the number of AI server racks worldwide to grow from about 55,000 in 2026 to 105,000 in 2027 and reach 163,000 in 2028. As GB200 adopts 400G +800G network architecture, GB300 is upgraded to 800G +1.6T, and the next generation Rubin and Rubin Ultra move further towards 1.6T and 3.2T, the demand for high-speed optical modules will continue to increase.
The penetration rate of silicon photons has risen sharply, and the leader's first-mover advantage builds a high wall
Compared with the last round of product upgrading, Goldman Sachs believes that the greater changes in this round of industrial transformation come from the technical route.
The report projects that silicon photonics (SiPh) will achieve 60%, 80% and 100% penetration in 800G, 1.6T and 3.2T products, respectively, by 2026. In the entire optical module industry, the revenue proportion of SiPh products will also increase from 28% in 2025 to 62% in 2028.
Goldman Sachs pointed out that silicon photonics not only has better power consumption and performance advantages, but also can reduce packaging complexity, improve supply chain flexibility, and effectively reduce costs, so it will quickly replace traditional EML solutions in high-speed products.Zhongji InnoLight is one of the earliest manufacturers in the world to realize the commercialization of high-speed silicon photonic modules.
At present, the company has laid out next-generation technologies such as coherent optical communication, LPO, LRO, XPO and CPO/NPO, and established a complete new product introduction (NPI) system, which can continuously shorten the cycle from R&D to mass production.
Goldman Sachs believes,With the tightening of the supply of core devices and the continuous improvement of the technical threshold of the industry, it will be increasingly difficult for new entrants to replicate this advantage, and the market share of leading manufacturers is expected to further increase.
Earnings Quality Jumps, Free Cash Flow and Cash Reserves Continue to Thicken
According to LightCounting and CIC statistics,InnoLight will become the world's largest optical interconnection solution provider by 2025With a market share of 21.2%, it maintained a leading position in a number of high-speed products such as 400G, 800G and 1.6T.
Goldman Sachs expects that the company's revenue will not only grow rapidly, but also the quality of earnings will continue to improve in the next few years. The report predicts that,The company's ROE will be further improved from 44% in 2025 to 52%-61% in 2026-2028; Return on capital (CROCI) can rise up to 137.5%.
Although capital expenditure is expected to grow by 155% year-on-year to 7.03 billion yuan in 2026 to support new capacity construction, free cash flow will continue to grow strongly and is expected to reach 8.5 billion yuan, 62.3 billion yuan and 111.5 billion yuan between 2026 and 2028, respectively.
At the same time, the company will continue to maintain its net cash status, and its cash and cash equivalents are expected to increase from about 11 billion yuan in 2025 to 195.1 billion yuan in 2028, and the cash conversion cycle is also expected to be shortened from 122 days to 98 days.
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