Memory chips have emerged as Wall Street’s hottest investment theme in 2026, but another new frontier in AI trading could be a driver of stock gains.
AI’s bullishness returned to the market, driving record stock gains in the second quarter. And some of the stocks that have soared have something in common that goes beyond memory.
Optical stocks have been among the biggest gainers as investors assess the next bottleneck in AI trading.
Optical technology uses photons to transmit signals and transmit data at the speed of light. This technology itself is not new and is probably something you use every day, as it is the backbone of the world’s internet infrastructure.
Business Insider spoke to WyzeMind CEO Dinesh Tyagi, an AI and chip expert with decades of experience in Silicon Valley who went into investing after selling his own technology company, to talk about why AI is driving a surge in demand for optical technology.
As the AI boom overcomes the computing shortage, new bottlenecks will emerge, such as memory and networking. Tyagi explained that optical technology can help solve communication problems between GPUs running AI computing in server racks in data centers.
Currently, traditional copper wires connect GPUs to racks, creating what Tyagi calls “traffic congestion” within the data communications network.
Optical technology can help solve this problem, but the industry expects significant advances in the technology to completely eliminate the bottleneck within the next two to three years, Tyagi told Business Insider.
Optical technology is more effective for AI computing, reducing the power, heat, latency, and cost hurdles associated with copper wiring.
Investors are betting big on optical technology, along with memory chips, for opportunities amid new AI bottlenecks.
While SanDisk, Intel and other memory stocks have dominated the S&P 500 component leaderboard since the beginning of the year, optical stocks have followed suit.
Lumentum, Ciena, and Corning are among the top 10 performing companies in the S&P 500 year-to-date, having more than doubled since the beginning of 2026. Corning stock soared on its recent partnership with Nvidia.
A new photonics ETF has appeared on the market, similar to the memory stock DRAM ETF. The Corgi Lithography & Semiconductor Photonics ETF, which trades under the ticker EUV, went public on May 6th.
“Light is the limiting factor in chip manufacturing, data transmission, and precision sensing, and the technology to manipulate light is controlled by a small number of companies,” explained Cboe, which runs the ETF.
The EUV ETF has been on the market for more than a week, and while it hasn’t seen as dramatic a rise as the DRAM ETF, it still trades in the green.