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The next stop for skyrocketing computing power: Tech giants are ramping up their DCI strategies, these key players in Hong Kong and US stocks are worth watching!

While market attention remains focused on GPU iterations, a 'transmission' revolution driven by 'computing power' is quietly erupting.

As the global competition for large AI models enters a white-hot phase, infrastructure bottlenecks are shifting. According to East Wu Securities,DCI (Data Center Interconnect) represents the post-cycle demand in AI computing infrastructure construction.When multiple data centers need to achieve interconnection across campuses, regions, or even continents, the demand for long-distance connectivity is expected to gradually increase.

So what exactly is DCI? Why is it becoming one of the most predictable investment themes for 2026? Which core players in Hong Kong and US stock markets are worth watching? This article will break it down step by step.

What exactly is DCI?

Data Center Interconnect (DCI) is a networking solution designed to enable interconnection between data centers located in different geographical areas, primarily used to meet the needs of data exchange, disaster recovery redundancy, and content distribution between these locations.

If a single data center is likened to aIf the 'super brain' (packed with GPUs and servers) is the core, then DCI (Data Center Interconnect) serves as the 'neural network' or 'high-speed railway' connecting these brains.。

It is a networking technology solution specifically designed to connect two or more physically separated data centers (whether across the street or spanning the Pacific Ocean) so they can operate in synergy like one massive, unified resource pool.

Why is DCI now entering a super cycle? The core reason lies in AI computing power hitting a bottleneck:

1. Single-point computing power has reached its limit: Training large models now requires clusters of 'tens of thousands' or even 'hundreds of thousands' of cards. A single data center simply cannot support such a massive heat-generating monster due to limitations in power supply, physical space, and cooling capacity.

2. Moving from 'centralization' to 'decentralization': Since cramming hundreds of thousands of cards into a single server room is impractical, tech giants are building multiple server rooms in different locations, andconnecting them with DCI to enable 'distributed training.'。

To allow GPUs in different server rooms to instantly transfer massive amounts of data without lag, DCI must haveultra-high bandwidth.(DWDM Dense Wavelength Division Multiplexing technology) andUltra-long-distance transmission capability with extremely low latency(Coherent optical technology).

In other words,Without DCI, the computing power scale of large AI models cannot continue to expand. It has transformed from a 'backup option' in the past to a 'must-have for expansion' today.

Why has DCI become one of the main investment themes for 2026?

If the past two years saw tech giants competing in an AI arms race focused on GPU computing power and model parameter figures, then by 2026, the battle has spread to the more hardcore physical infrastructure—connecting isolated data center computing resources via the 'information superhighway.' From the latest industry data, the giants’ real investments have already been made, making 2026 officially a blockbuster year for DCI equipment tenders.

According to market reports, the total value of DCI tenders in North America for 2026 is expected to reach$15 to $16 billion, representing a significant increase of about 50% compared to 2025.

$Alphabet-C (GOOG.US)$ The DCI equipment bidding for Q1 2026 has been completed, with the bid amount approximately $6 billion. The execution will be carried out over 2-3 years; large-scale delivery is expected to begin in H2 2026 and continue for 2-3 years.

$Microsoft (MSFT.US)$ The plan is to initiate DCI bidding in Q2 2026, with an amount of about $6 billion, expected to be completed over two years; delivery will begin in H2 2026, and 2027 will see the peak deployment phase.

$Meta Platforms (META.US)$ The plan is to initiate DCI bidding in H2 2026, with an amount of approximately $2-3 billion; delivery is expected to start by the end of 2026, entering a concentrated deployment phase in 2027.

$Amazon (AMZN.US)$ The plan is to initiate DCI bidding in H2 2026, with an amount of approximately $2.5-3 billion, expecting overall delivery and deployment to be completed over two years.

As budgets exceeding $10 billion gradually materialize, 2026 is expected to drive a full-scale increase in volume across the entire DCI industry chain.

What are the core players in Hong Kong and US stocks worth paying attention to?

The DCI industry chain features extremely high technological barriers, and the tech giants' multi-billion-dollar orders will be transmitted along the supply chain from bottom to top. Below are key players in Hong Kong and US stocks that deserve close attention:

Among them,Most importantly, downstream — DCI transmission and switching equipment companies — are the terminal beneficiaries reaping multi-billion-dollar orders.

This is the most profitable segment in the entire DCI industry chain. The significant Capex expansion by tech giants is first and most directly reflected in these equipment suppliers’ order books. Currently, the North American market shows extreme concentration.An oligopolistic landscape (Ciena, Nokia, and Cisco collectively account for 80%-90% market share)., and is proceeding alongtwo major technological routesin intense competition:

Camp One: Proprietary DCI transmission systems (the foundation of traditional optical transmission giants)

Mainly serving the need for ultra-high stability, dedicated line direct connections for long-distance data center interconnections.

$Ciena (CIEN.US)$—— Absolute leader: Firmly holding the largest market share in North America (approximately 40%-45%). As a pure optical communication network giant, when major companies like Meta and Amazon require dedicated lines to interconnect data centers, CIEN is the undisputed top choice, with an extremely solid foundation.

$Nokia Oyj (NOK.US)$—— The strongest dark horse for value re-evaluation: After acquiring optical communication giant Infinera, its market share surged to 20%-30%, closely approaching Ciena. Notably, the market expects Nokia to secure 50%-60% of Google’s massive order in the Q1 2026 bidding process, making it the core target with the highest earnings elasticity in this round of bidding.

$ZTE (00763.HK)$—— Domestic computing power foundation: A giant in China's telecommunications equipment and transmission networks, capturing the key forces in the domestic native computing power network layout.

Camp Two: IP over DWDM (The Disruptive New Force with High Growth)

Core Trend:Abandoning traditional bulky DCI transmission boxes, coherent optical modules are "directly plugged into" network switches, significantly saving physical space and power consumption in data centers—a hot trend in the AI era.

$Arista Networks (ANET.US)$——The King of Cloud Switches: The absolute core driving IP over DWDM. Leveraging its technological advantages, it has captured a large number of AI backend network orders (e.g., GPU cluster interconnections) and is the most dazzling AI networking stock in recent years.

$Cisco (CSCO.US)$——The Giant’s Defensive Counterattack: Holding a 10%-20% share in North American DCI. To defend against disruptors, Cisco made a hefty investment to acquire coherent optics giant Acacia, now equipped with a full suite of IP over DWDM solutions from 'chip → module → router.'

$Hewlett Packard Enterprise (HPE.US)$——Enterprise Market Raider: A traditional IT infrastructure giant that recently entered the fray through the acquisition of Juniper Networks, aggressively aiming to seize a share of the AI enterprise interconnection market.

The upstream — photonic core chips and foundational hardware — represents the high-barrier 'water sellers,' where the technical threshold is highest and profit margins are most substantial.Specifically:

1. Computational power photonic core chips

$Broadcom (AVGO.US)$ is the absolute leader in networking chips.In AI networks, its Tomahawk and Jericho series of switching chips are indispensable. Additionally, it has made deep investments in silicon photonics technology, making it the most certain beneficiary of AI computational network expansion.

$Marvell Technology (MRVL.US)$ Together with Broadcom, they form a duopoly.It is the leader in electro-optic conversion DSP (digital signal processor) chips. Whenever DCI requires high-speed, long-distance electro-optical signal conversion, MRVL’s chips are almost unavoidable. Within Marvell's extensive technology product line, data center interconnect modules play an important role, primarily used to transmit data across regional fiber optic networks.Marvell's Chairman and CEO Matt Murphy highlighted the company’s progress during the earnings call, pointing out that the company is acquiring new customers and expects to supply DCI modules to the top five U.S. hyperscale cloud service providers this year.

$POET Technologies (POET.US)$ Represents a more cutting-edge player. Its core technology is the 'optical interposer,' which seamlessly integrates electronic and photonic components. With a smaller market cap, it is a high-risk, high-volatility flexible investment target.

2. Core optical devices and passive network components

$Coherent (COHR.US)$& $Lumentum (LITE.US)$These two companies are global leaders in lasers and optical components. DCI transmission requires light emission, and they are the leading suppliers of core light sources (such as VCSEL and EML laser chips). They also possess upstream and downstream integration capabilities and produce midstream modules.

3. Physical Layer Testing and Network Monitoring

$Keysight Technologies (KEYS.US)$& $Viavi Solutions (VIAV.US)$：The "quality inspectors" and "toll booths" of the networking world. Before cloud giants spend billions of dollars laying down DCI networks, they must undergo rigorous testing and validation. Keysight's business broadly covers electronic testing, while Viavi is more specialized in fiber optic network and communication testing. The year-to-date increases for these two companies are 50% and 116%, respectively.

4. Fiber Optic Cables (Physical Transmission Path)

$Corning (GLW.US)$YesA century-old materials giant and the founder of global fiber optic technology. DCI interconnection essentially requires the deployment of massive fiber optic networks, with Corning being the directly benefiting leader in physical infrastructure. Year-to-date increase has reached 70%.

$YOFC (06869.HK)$ The leading domestic fiber optic cable company, this firm’s year-to-date increase is as high as 330%. Not only does it fully benefit from the expansion of giants and the physical infrastructure dividend of 'East Data West Calculation,' but even more noteworthy is its forward-looking layout in the next generation"Hollow Core Fiber"This technology allows light to travel at near vacuum speeds, reducing latency by over 30%. As an important technical solution for DCI, hollow core fiber has significant technological advantages and market potential, with commercialization expected to accelerate noticeably in the coming years.

5. Foundry Services for Specialized Wafers

$Tower Semiconductor (TSEM.US)$ An invisible champion in the field of optical communications, DCI transmission requires extremely high-frequency analog signal conversion, which depends on semiconductors made from special materials (such as SiGe silicon germanium, BiCMOS processes), and Tower is one of the top foundries globally in these specialized analog processes. Many network chip design giants (such as Broadcom, Marvell) rely on such specialized process plants to manufacture their underlying optoelectronic conversion chips.

Midstream — High-speed coherent optical modules and advanced manufacturing act as the "assembly factories" selling shovels. The core technology in DCI cross-regional transmission lies in "coherent optics," which ensures optical signals can travel thousands of kilometers without distortion.Specifically,

1. High-speed coherent optical modules

$Coherent (COHR.US)$ & $Lumentum (LITE.US)$: Leveraging their upstream component advantages, they also hold a significant position in the high-end coherent optical module market.

$Applied Optoelectronics (AAOI.US)$: The stock price has experienced significant volatility over the past few years. Recently, they have been aggressively transitioning to high-speed modules like 400G/800G and have entered the supply chains of major companies such as Microsoft. This is a highly elastic stock but one that also requires attention to risks.

$FIT HON TENG (06088.HK)$: This company’s core advantage in the DCI field lies in 'relying on Hon Hai Group's vertical integration and precision mass production dominance'; It not only possesses the mass production capabilities for 800G or even 1.6T high-speed optical modules and advanced copper connectivity technologies but can also directly leverage its parent company’s leading position in global AI server and networking equipment OEM markets. This allows for rapid internal validation and bundled shipments of optoelectronic modules, converting high-end technology into large-scale, low-cost predictable revenue with an ecosystem moat that other independent module manufacturers find hard to match.

2. High-end optoelectronic contract manufacturing

$Fabrinet (FN.US)$: The 'Taiwan Semiconductor' of the optical communications field. The packaging and manufacturing of optical modules are extremely complex and yield-dependent; many European and American optics giants (e.g., Cisco/Acacia) outsource their manufacturing to FN. Visibility of earnings is very high, and it has deep competitive advantages.

Summary

Global AI infrastructure is undergoing a paradigm shift from 'individual point computational expansion' to 'global transmission revolution.' 2026 is expected to be the 'first year of performance realization' as DCI orders fully materialize. While capturing the sector’s high certainty of growth, we recommend fellow investors remain rational and continue tracking variables such as reduced capital expenditures by tech giants, disruptive effects of new technologies, geopolitical competition, and high valuation premiums.

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