While today’s headlines are dominated by the escalating kinetic conflict with Iran, capital continues to pour into artificial intelligence infrastructure at an extraordinary pace.
Over the weekend, OpenAI announced what is being described as the largest single venture capital raise on record, a $110 billion financing round at a $730 billion valuation. The funding includes $50 billion from Amazon, $30 billion from Nvidia (NVDA), and $30 billion from SoftBank. To put that in perspective, the raise alone represents roughly 21.5% of all venture capital invested in 2025 and amounts to nearly half of total US venture investment in 2024, which was distributed across more than 14,000 transactions.
The buildout extends beyond model developers. Alphabet (GOOGL) announced plans this week to construct a new data center complex in the Minneapolis area, powered entirely by renewable energy and supported by what is expected to be the world’s largest battery storage system. The project underscores both the scale and energy advancements of AI-related infrastructure spending.
Meanwhile, Nvidia revealed it will invest $2 billion each in Coherent Corp (COHR) and Lumentum (LITE), two global leaders in photonics technology. Photonics has become increasingly critical to AI architecture, as the demand to transmit massive amounts of data at higher speeds and lower latency continues to rise. Coherent and Lumentum have already been among the market’s strongest performers in recent months, and the announcement sent shares sharply higher again, with gains today of 14% and 9%, respectively. Nvidia, which has traded sideways over the past six months amid consolidation, is also moving higher, up more than 3% on the day.
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COHR and LITE Shares Remain Persistent Leaders
Coherent Corp and Lumentum have been two of the most consistent leaders over the past six months as demand for specialized AI-enabling hardware continues to expand beyond GPUs and into the optical backbone of the data center.
As AI workloads scale, the need to move massive volumes of data faster and more efficiently has become mission critical. That shift has placed photonics and optical interconnect technologies at the center of the next leg of infrastructure spending. The result has been meaningful earnings upgrades for both companies. Lumentum currently holds a Zacks Rank #1 (Strong Buy), while Coherent carries a Zacks Rank #2 (Buy), reflecting improving estimate trends and strengthening fundamentals.
The recent capital commitments reinforce that trajectory. Between the record OpenAI financing and direct investments into leading photonics players, Nvidia continues to broaden and deepen its footprint across the AI ecosystem. Its latest quarterly report underscored that dominance, with revenue rising 73% year over year, another demonstration that AI infrastructure demand remains robust.
Although Nvidia shares have largely consolidated over the past six months, that pause has reset expectations. At roughly 25x forward earnings, the stock now trades at a multiple that looks increasingly reasonable relative to a long-term earnings growth outlook approaching 50%. For a company still compounding revenue at this scale, valuation compression has arguably made the risk-reward more balanced than at any point in recent years.
Targeting niche infrastructure leaders has proven especially effective during this consolidation phase among mega-cap AI names. While flagship stocks digest prior gains, secondary and tertiary beneficiaries of the AI buildout have continued to break out. As an example, RF Industries (RFIL), a name highlighted here last week, surged higher today, breaking out from the constructive technical pattern previously identified.
The theme remains intact: as AI capital spending broadens, leadership is extending deeper into the supply chain.
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Where to Invest as the AI Buildout Continues
The magnitude and consistency of recent capital commitments make one thing clear: the AI buildout is not slowing. If anything, it is accelerating and broadening.
A $110 billion venture raise, multibillion-dollar direct equity investments into photonics leaders, and new hyperscale data center complexes powered by dedicated energy infrastructure all point to the same conclusion, that this is a multi-year capital cycle, not a short-lived surge. The spending is no longer confined to model development or GPUs. It now spans optical networking, energy storage, grid expansion, and the full stack of data center architecture.
Early in a technology cycle, leadership is often concentrated in the most visible platform companies. As the cycle matures, performance tends to diffuse into specialized suppliers and enabling technologies. The strength in Coherent Corp and Lumentum reflects that broadening dynamic, while Nvidia continues to anchor the ecosystem with scale, capital, and pricing power.
Geopolitical volatility may dominate the news cycle, but markets ultimately follow capital flows and earnings growth. At present, both remain firmly aligned with AI infrastructure expansion.
As long as estimate trends stay constructive and capital expenditures continue to climb, the path of least resistance for select AI infrastructure names appears higher. The next leg of leadership may not look identical to the first, but the underlying theme remains intact, the AI investment wave is still building.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Coherent Corp. (COHR) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Lumentum Holdings Inc. (LITE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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