What Is Photonics? The Technology Behind the Next AI Boom

Photonics is the science of using light to transmit information. In the context of AI data centers, it means replacing copper wires with laser beams to move data between processors. Jason Bodner calls it the “light-speed device” in his Accelerated AI presentation, and he makes the case that this single technology shift could create a second AI boom that dwarfs the first.

The concept is straightforward. Every time you ask ChatGPT a question, it burns roughly 10 times more electricity than a Google search. A single AI data center can consume as much power as 100,000 homes. The bottleneck is not the chips themselves but the copper connections between them. Electrons in copper travel at less than 1 percent of the speed of light. Light, by contrast, travels at 124,000 miles per second. It carries more data, barely uses power, and does not generate the heat that copper does.

Bodner puts it bluntly: “Nothing in the known universe moves faster than light.” He calls photonics “holy grail tech,” and he is not the only one using that phrase. Sequoia Capital said the same thing. Google Ventures has backed photonics startups. Jensen Huang is directing Nvidia’s investments toward it. The Optical Interconnect Alliance, whose members include Nvidia, AMD, Broadcom, Microsoft, Meta, and OpenAI, exists specifically to accelerate this transition.

Why Copper Is the Problem

AI systems like the ones OpenAI, Meta, and Google are building require thousands of GPUs to work together simultaneously. The data moves between those chips over copper wires. Copper has served the computing industry well for decades, but it has physical limits. It generates heat, it consumes significant power, and it cannot keep up with the bandwidth demands of modern AI workloads.

Bodner frames this as Phase 2 of what he calls the Acceleration Curve. Phase 1 is the initial boom, when a technology explodes onto the scene. Phase 2 is the wall, when the infrastructure cannot keep up. Phase 3 is the breakthrough that smashes through the wall. He argues that AI is currently in Phase 2, and photonics is the Phase 3 breakthrough.

The historical precedent is compelling. In the 1990s, the internet hit a bandwidth wall because data moved over copper phone lines. Users called it the “World Wide Wait.” Then fiber optics replaced copper. Companies like Akamai rose 16,497 percent, Equinix rose 37,000 percent, and Netflix rose 188,471 percent. Smartphones followed the same pattern. Cirrus Logic rose 6,500 percent. Monolithic Power rose 17,000 percent. The pattern, Bodner argues, is now repeating with AI.

The Structural Evidence

The money flowing into photonics is not speculative. It is strategic deployment by the largest players in the industry:

  • Nvidia has invested over $7 billion in photonics companies and partnered with Corning to build three optical factories in the United States.
  • AMD is building a $280 million photonics research hub.
  • Ayar Labs raised $500 million from ARK Invest and Sequoia Capital.
  • Google and Microsoft are backing nEye, which raised $80 million.
  • Bill Gates has personally invested over $200 million in two photonics companies.
  • Elon Musk will need to integrate photonics for SpaceX’s planned fleet of one million AI satellites.

These are not small bets. They are the kind of capital deployments that happen when the largest companies in the world see a technology shift coming and want to be positioned for it.

What It Means for Investors

Bodner reveals Broadcom (AVGO) for free in the presentation. Broadcom is deeply embedded in the photonics transition because it designs custom AI silicon for OpenAI, Meta, Anthropic, and Google, builds the networking switches that let AI chips communicate, and debuted the industry’s first 400G optical chip, which converts electrical signals to light. As we explore in our full review of the Accelerated AI presentation, Broadcom’s AI revenue was $10.8 billion last quarter, up 143 percent year over year.

The three bonus picks behind the paywall include a pure photonics play that moves data as light between data centers across cities and states, with a new product that cuts networking power use by 70 percent. Another builds the parts that turn electrical signals to light inside AI clusters and was recently called “the next trillion-dollar company” by Jensen Huang. For more on the networking layer, see our Broadcom optical chips article.

The broader investment thesis is that the companies solving the copper bottleneck will be the biggest winners of the next phase of AI. As Bodner puts it, the next 12 to 24 months could hand investors “bigger gains than the entire AI boom of the past three years combined.” That is a projection based on the Acceleration Curve framework, not a guarantee, but the underlying technology shift is real and well-funded.

Considerations

Photonics is a genuine engineering discipline, not a marketing invention. The transition from copper to light inside data centers is already underway. The risks are timing and execution. These transitions take years, and the companies that win may not be the ones getting the most attention today. Bodner acknowledges this: “I don’t always get it right.” That is appropriate humility from someone with a strong but not perfect track record.

The right approach is to understand the technology, follow the capital flows, and use research like Bodner’s as one input into your decision-making process. If you want to explore the full thesis, you can access the Accelerated AI presentation through Brownstone Research.

This is not financial advice. Always do your own research before investing.