To The Moon

Lumentum Holdings joining the NASDAQ-100 does create a genuine short-term technical catalyst because passive ETFs and benchmark-tracking funds are effectively forced buyers. That can extend momentum into and shortly after inclusion.

But historically, index inclusion rallies often become “buy the rumour, sell the news” events once passive positioning is completed. If valuation stretches too far ahead of fundamentals, post-inclusion volatility can arrive quickly.

Meanwhile, Applied Optoelectronics showed the market is no longer rewarding “AI exposure” alone. Expectations in optical networking have become extremely demanding:

Investors now expect visible hyperscaler orders,

sustainable margins,

and strong forward guidance simultaneously.

Within opticals, I would separate the sector into two groups:

higher-quality infrastructure names with diversified hyperscaler exposure and clearer execution,

versus highly speculative momentum names driven mainly by AI enthusiasm.

My preference now is selective dip-buying rather than aggressively chasing vertical rallies. Optical infrastructure demand remains structurally strong because AI clusters require enormous interconnect bandwidth, but many stocks already discount years of growth.

So:

chasing pure index-inclusion momentum carries elevated short-term risk,

while buying sharp pullbacks in fundamentally strong optical leaders may offer better risk-reward if the AI infrastructure cycle remains intact into 2027.