Nvidia has put its Spectrum-X Ethernet Photonics platform into full mass production, becoming the first co-packaged optics Ethernet switch built for high-volume shipping. The move extends Nvidia's reach from chips into the networking layer that connects them, with CoreWeave, Lambda and Oracle already running the new platform and Nvidia's networking revenue nearly tripling year over year.
Nvidia just put its Spectrum-X Ethernet Photonics platform into full mass production, the first co-packaged optics Ethernet switch built for 200G-per-lane volume shipping. The launch pushes the company beyond selling processors and into owning the wiring that links them inside AI data centers.
Solving the network bottleneck
Traditional AI data centers connect GPUs with pluggable optical transceivers, separate parts that convert electrical signals to light and back. At the scale of a million-GPU cluster, each extra transceiver is another point of failure. Nvidia's answer was to solder the optics directly onto the switch chip, a design the company says delivers four times fewer lasers, five times lower network power draw and a 64-fold improvement in signal integrity, while optical loss fell from roughly 22 decibels to about four.
Nvidia posted $81.7 billion in fiscal first-quarter revenue, up 85% year over year, with data center revenue alone reaching $75.2 billion. CoreWeave, Lambda and Oracle are the first customers on Spectrum-X Photonics, with production ramping from May through July before reaching full volume.
A widening moat, and a supply chain behind it
Nvidia's networking revenue nearly tripled to $14.8 billion in fiscal second-quarter 2026, up 199% year over year, making the segment its own growth engine rather than a side business. Nvidia's trailing price-to-earnings ratio of roughly 34 sits well below its five-year average near 69, suggesting the market isn't pricing the move as a moonshot.
The buildout depends on outside suppliers. Taiwan Semiconductor Manufacturing handles the advanced silicon photonics fabrication, with packaging capital spending rising toward 20% of its planned $52 billion to $56 billion 2026 budget. Lumentum Holdings supplies lasers and optics into the buildout and has secured multi-hundred-million-dollar orders for delivery in the first half of 2027; its fiscal fourth-quarter revenue hit $1.01 billion, more than double a year earlier.
Competition isn't standing still. Advanced Micro Devices is projecting 64% EPS growth for 2026. Yole Group pegs the entire data-center co-packaged optics market at roughly $46 million in 2024, growing to $8.1 billion by 2030.
Source: 24/7 Wall St.
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