Goldman Sachs sees optical networking market surging 9x by 2028

Goldman Sachs Research projected the AI networking market would jump from about $15 billion in 2026 to $154 billion by 2028, a 9x expansion driven by the buildout of AI infrastructure. The bank framed optical networking as the piece that lets multiple AI chips talk to one another with low latency, turning raw compute into something that can be scaled across systems rather than trapped inside a single chip.

For Goldman bankers and industry specialists, the real action sits in the parts of the stack that can bottleneck or unlock that growth: co-packaged optics, silicon photonics, copper cables, pluggable optical modules and PCB midplanes. Goldman said scale-up and scale-out networking both matter, but external coverage of the model put scale-up at about 69% of the total market, or roughly $106 billion, and CPO at about $91 billion, or 59% of the $154 billion pool. That means coverage teams following semiconductors, datacenter infrastructure and communications hardware will have to watch who controls the highest-value interfaces between chips, switches and racks.

The report also points to where supply chain conversations could get more important inside the firm. Goldman said silicon photonics adoption could rise to 45% by 2028, while supply of key light sources is expected to stay tight through 2027. That creates a financing and advisory angle for companies like Coherent, Corning Incorporated, Foxconn and SENKO, along with the manufacturing and assembly ecosystems around San Jose and Santa Clara. If capacity stays constrained, procurement, capex planning and customer concentration become as important as product road maps.

The timing matters. The Optical Fiber Communications Conference and Exhibition in Los Angeles drew nearly 18,000 attendees in March 2026, and its organizers described strong momentum around AI infrastructure and optical networking. Industry reporting from the show said CPO dominated the floor, with three new CPO-driven MSAs and a view that scale-up CPO is coming in 2028. That matches Nvidia’s March 18, 2025 announcement of Spectrum-X Photonics and Quantum-X silicon photonics networking switches, which it said would deliver 1.6 terabits per second per port, 3.5x energy savings and 10x resilience.

Nvidia deepened that bet again on March 2, 2026, when it announced a strategic partnership with Lumentum that included a $2 billion investment to expand capacity, advance U.S.-based manufacturing and deepen R&D collaboration in data center optics. Goldman’s broader AI spending view raises the stakes further: Goldman Sachs Research separately said 2026 AI company spending could exceed $500 billion, which makes optical networking less of a niche component story and more of a deal flow map for the bank’s technology, financing and M&A coverage teams.