Wall Street defends AI plumbing stocks — accumulate optical networking picks
Thesis
While everyone focuses on the big AI chipmakers, the companies building the plumbing that connects those chips are seeing massive order books. Today, JPMorgan defended Lumentum, while analysts specifically highlighted Semtech and Ciena for their critical roles in AI data centers. Because these stocks are less crowded than the headline AI names, they have more room to run as data center build-outs accelerate. Buying a basket of these networking picks captures the next wave of AI spending.
Strategy approach
Build a rotation strategy across LITE, SMTC, CIEN, and HPE. Rank the four stocks by 5-day relative strength vs the SPY. Enter long the top 2 ranked stocks on the next open if they are above their 20-day EMA. Hold for 10 trading days or exit if either stock closes below its 10-day EMA. Equal-weight allocation.