Nvidia is investing billions into tech that could change the AI sector

Nvidia The company has committed at least $6.5 billion to companies developing photonics technology in the past three months as it races to invest in solving one of the biggest bottlenecks to the widespread adoption of artificial intelligence.

Photonics, which refers to the use of light to transmit data, is an emerging technology that is thought to be a more efficient alternative to the existing process of transferring data using electricity. Electrical data transfer consumes more energy; this factor is increasingly seen as an impediment to the wider deployment of artificial intelligence.

Since the beginning of March, Nvidia has announced investments of $2 billion. Lumentum, Consistent And Marvelall of them are developing photonics technology. The chip giant also said it would invest $500 million. Corning to develop advanced optical connectivity solutions and participated in optical startup Ayer Labs’ $500 million Series E funding round.

“Photonics represents a way for Nvidia to scale its AI infrastructure without the energy costs of staying with electricity and copper,” Forrester senior analyst Alvin Nguyen told CNBC.

“By investing in photonics companies, Nvidia is ensuring that advances in photonics continue to occur and will prevent them from hitting the scalability and performance wall that would occur if they remained on electricity and copper.”

Photonics can be used in AI infrastructure by using light to move data between graphics processing units (GPUs), memory, network chips, servers, and data centers, rather than relying solely on electrical signals passing over copper.

While copper is the main connectivity standard today due to its low cost and high reliability, photonics will become more prominent in AI infrastructure over time, Morningstar senior equity analyst Brian Colello told CNBC.

“Nvidia’s roadmap for next-generation AI rack-scale solutions will require increasing amounts of optical connectivity to handle exponentially increasing bandwidth with new models and higher usage,” he said.

The chip giant has already rolled out some photonic technologies as part of its networking solutions offering, and the company has announced tools that it says will enable AI factories to connect millions of GPUs across facilities while greatly reducing energy consumption and operating costs.

“When you look forward, you conclude that we are starting to scale our silicon photonics technology,” Nvidia CEO Jensen Huang said in a speech at GTC in March, pointing to the Ethernet networking platform used to connect Nvidia’s AI factories and GPU clusters. He also said that the company has begun adding photonics to its GPU-to-GPU interconnect technology.

“This means that the amount of silicon photonics technology capacity we need is much higher than what the world has today,” he added. “So we’re working with the supply chain to make sure we can help them build the capacity upfront.”

Lumentum’s shares are up 134% since the beginning of the year, while Coherent’s shares are up 96%. Marvell has seen its shares rise 122% in 2026, while Corning has seen its shares rise 111%.

Nvidia is one of many AI stakeholders that have recently turned to pouring cash into photonics technology.

chip maker AMD It joined Nvidia in its Ayer Labs round and acquired startup Enosemi in 2025, as well as making equity investments in Teramount and Celestial AI. Alphabet And Microsoft Their venture arm backed nEye in an $80 million Series C round in April.