A 12-month sweep of the Nasdaq’s biggest gainers turned up something Wall Street’s narrative struggles to absorb: three companies tagged as “communications equipment” each delivered more than 1,000% returns over the past year while Nvidia Corp. (NASDAQ:NVDA), the stock that supposedly defines the AI trade, returned 75%.

Lumentum Holdings Inc. (NASDAQ:LITE) gained 1,462%. Ondas Holdings Inc. (NASDAQ:ONDS) gained 1,119.11%. Applied Optoelectronics Inc. (NASDAQ:AAOI) gained 1,164%. Each return is more than 13 times what Nvidia delivered over the same window.

Why ‘Telecom’ Is The Wrong Label

These three stocks are all in the SPDR Telecom ETF (NYSE:XTL), although the sector tag may be misleading.

The Global Industry Classification Standard files all three under Communications Equipment, but none is a traditional telecom carrier or handset supplier.

Two are optical-component makers riding the same datacenter buildout that put Nvidia at the center of the AI trade. The third operates in a different lane entirely.

Lumentum makes optical and photonic components used inside hyperscaler datacenters, alongside commercial lasers for manufacturing and inspection. The thesis is straightforward: every Nvidia GPU cluster needs interconnects to talk to other clusters, and 800-gigabit and 1.6-terabit optical transceivers are the bottleneck.

As CapEx from Microsoft Corp. (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOGL) and Amazon.com Inc. (NASDAQ:AMZN) has accelerated through late 2025 and into 2026, Lumentum has captured a disproportionate share of that spend.

Applied Optoelectronics sits on the same shelf. The company designs fiber-optic networking products for four end markets — datacenters, cable TV, telecom and fiber-to-the-home — but the rally is almost entirely about the first one.

A partnership disclosed earlier this year with Fabrinet (NYSE:FN) to manufacture 800G transceivers for Amazon’s datacenter network reframed the company as a credible second-source to Lumentum and the Coherent Corp. (NYSE:COHR) cohort. The market repriced accordingly.

Ondas is the odd one in this trio. The company runs two segments: Ondas Networks builds FullMAX software-defined radio systems for railroads, utilities and other mission-critical industrial users, and Ondas Autonomous Systems builds drone platforms deployed across the United States, Israel and India.

The driver here is not AI infrastructure — it is the post-Gulf War III bid for defense-adjacent autonomy and resilient industrial communications. Same sector tag, completely different macro story.

Wall Street Is Split — And Mostly Behind The Price

The analyst picture is unusual. For two of the three names, consensus price targets sit well below where the stocks actually trade, a sign Wall Street has not caught up to the rally.

The third tells the opposite story.

According to Benzinga Analyst Stock Ratings, Lumentum carries a Buy consensus rating with a Street-average price target of $648.50 and a Street-high of $1,270.00 set by Rothschild & Co on May 1, the highest target on the Street. JP Morgan reiterated its Overweight rating on April 9, with a target of $950, up from $565.

The most recent ratings from Rothschild, Morgan Stanley and JP Morgan imply a small downside of roughly 1.4% to current levels.

Applied Optoelectronics shows the most stretched picture. Wall Street consensus sits at $66.80, compared with a Street high of $140.00 — well below the current $180.62 price.

Rosenblatt holds the high target after raising twice in two weeks, from $50 to $125 on Feb. 27 and again to $140 on March 9. B. Riley Securities upgraded the stock from Sell to Neutral on Feb. 27 with a target of $54, then a level the stock blew through within days.

The implied downside from recent Street prints sits around 35%, a number that says more about how fast the rally moved than about analysts’ conviction.

Ondas runs in the other direction. The Street’s average target is $17.50, well above the current $9.66 — implied upside of roughly 81%. Northland Capital Markets reiterated its Outperform rating on March 26, with a $18 target, up from $16. Needham reiterated a Buy at $23 on March 25, the Street high.

The stock has pulled back from earlier 2026 highs, leaving consensus pointing higher even as the year-over-year return still tops 1,000%.

What Investors Should Watch Next

And the timing now matters. Lumentum reports fiscal third-quarter 2026 earnings after the close on Tuesday.

Applied Optoelectronics reports first-quarter 2026 after the close on Thursday. Ondas reports on May 18.

A tape that has rewarded these three at more than 10 times Nvidia’s pace is about to get its first real check from operating data, in a macro environment where the Fed is on hold and oil sits at $100. 

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