Nvidia, you see, is throwing money around. Billions. Not pocket change. Billions. They’re betting on optics companies, Lumentum and Coherent. A couple of outfits making the little bits that move data around inside those big computer brains. So it goes.
And wouldn’t you know it, these two companies – Lumentum and Coherent – just got tapped for the S&P 500. The big leagues. The place where all the respectable companies hang out. It’s a bit like getting a gold star, only instead of a gold star, you get a lot of index funds buying your stock. Which, let’s be honest, is the point.
The Index, Such as It Is
The S&P 500. Five hundred companies. Supposedly the cream of the crop. They have rules, of course. A company needs to be American, have a market cap of over twenty-two billion dollars, and be… liquid. Meaning people are actually buying and selling the stock. And, naturally, they need to be making a profit. At least for a little while. It’s all very orderly. Very human. And, ultimately, a bit absurd.
Lumentum and Coherent, along with Vertiv and EchoStar, are joining the club on March 23rd. A little boost for their stock prices, no doubt. The index funds will have to buy shares. It’s a self-fulfilling prophecy, really. A bit like believing in Santa Claus, except instead of toys, you get quarterly earnings reports.
This all started with Nvidia, of course. A “multiyear strategic agreement” they called it. A fancy way of saying “we’re giving them a lot of money.” Two billion dollars each. A substantial sum. They need those optical components. Data centers, you see, are hungry for bandwidth. And lasers, apparently, are the key.
Nvidia explains it’s about “scaling AI factories.” Which sounds impressive, doesn’t it? But really, it’s just about moving ones and zeros faster. More efficiently. So we can all have slightly better cat videos. So it goes.
The stock market, predictably, has reacted. Coherent and Lumentum have both seen their prices go up. Significantly. Over the past year, they’ve jumped 279% and 932%, respectively. Which means they’re now trading at 34 and 45 times next year’s earnings. A bit rich, wouldn’t you say? But, then again, who are we to judge?
A big investment from Nvidia, coupled with inclusion in the S&P 500… it’s a recipe for attention. A little bit of momentum. Worth a look, perhaps. If you’re the type who likes to gamble. We all are, aren’t we? Just in different ways. And ultimately, it all means very little.
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2026-03-10 02:04