Memory Chips Aren’t the Only New AI Bottleneck Fueling Stock Gains

Memory chips have emerged as the hottest investing theme on Wall Street in 2026, but there might be another new frontier in the AI trade posed to fuel strong stock gains.

AI bullishness has returned to markets, setting off a record-setting rally in stocks in the second quarter—and there’s a common thread among some of the top gainers beyond memory plays.

Optics stocks have become some of the strongest gainers as investors assess the next bottleneck in the AI trade.

Optical technology communicates signal using photons, transmitting data at the speed of light. The tech itself isn’t new and it’s something you likely use everyday, as it’s the backbone of the world’s internet infrastructure.

Business Insider spoke with WyzeMind CEO Dinesh Tyagi, an AI and chip expert with decades of experience in Silicon Valley who has ventured into investing after selling his own tech company, about why AI has sparked a surging demand for optical tech.

As the AI boom moves past its compute shortage, new bottlenecks like memory and networking emerge. Tyagi explained that optical tech helps address the communication problem between GPUs doing the AI computing the server racks within data centers.

Currently, with traditional copper wires connecting GPUs to racks, there’s what Tyagi called a “traffic jam” within the data communication network.

Optics tech helps address this problem, but the industry expects major advancements in the tech to eliminate the bottleneck entirely in the next two to three years, Tyagi told Business Insider.

Optical tech is more effective for AI computing, reducing the power, heat, latency, and cost hurdles that come with copper wiring.

Investors are betting big on optical tech, along with memory chips, as they look for opportunity within emerging AI bottlenecks.

Sandisk, Intel, and other memory stocks top the leaderboard of year-to-date S&P 500 component performers, but optical stocks are hot on their tail.

Lumentum, Ciena, and Corning within the top 10 best year-to-date S&P 500 performers, more than doubling since the start of 2026. Corning stock popped on a recent partnership with Nvidia.

Like memory stocks’ DRAM ETF, a new photonics ETF has hit the market. The Corgi Lithography & Semiconductor Photonics ETF , which trades under the ticker EUV, was listed on May 6.

“Light is the limiting factor in chipmaking, data transmission, and precision sensing, and a small number of companies control the technologies that manipulate it,” Cboe, the firm behind the ETF, explained.

EUV ETF hasn’t seen the same dramatic rise as DRAM ETF since its more than a week on the market, but is trading in the green.