EP 188: The Wild West of Optical, Cisco's AI Hack, and Is Compute an Investable Asset

The AI infrastructure build-out faces significant technical and economic challenges, particularly regarding the transition to advanced optical networking and the sustainability of massive capital investments. While near-packaged optics (NPO) gain traction, co-packaged optics (CPO) remain a distant, manufacturing-intensive goal. Cisco has successfully re-entered the data center conversation by leveraging internal silicon and integrating Anthropic’s models for enterprise security audits. Meanwhile, wafer equipment providers like Applied Materials report record visibility through long-term agreements, though Intel’s capital expenditure remains a critical, unresolved variable. NVIDIA’s proposed $500 billion financing platform highlights the tension between enabling necessary AI infrastructure and the potential for circular demand. These developments underscore a broader shift toward treating compute as a critical, long-term investable asset, despite ongoing debates about the long-term return on capital and the risk of over-investing in rapidly evolving hardware.