By Lisa Thompson
NASDAQ:POET
READ THE FULL POET RESEARCH REPORT
Q3 showed no revenues and we expect no revenues again in Q4. While we still expect NREs to be generated going forward from customers other than Celestial AI (who has moved to the product stage) none will be booked in Q4. We now expect POET (NASDAQ:POET) to start selling Interposer wafers in volume to SPX in Q1’24. Celestial AI will begin to take in completed light source modules toward the end of 2024. POET is about to send Celestial AI alpha samples of a new design it requested. Celestial AI is working with Samsung to design light-enabled memory drives for AI applications. POET is talking to all of the other AI hardware players including Lightelligence in China, Light Matter, and Ayar Labs.
Despite these setbacks, we do expect the company to announce that several well-known data center module makers, who sell to data centers supporting AI, have chosen POET as a source of 800G engines. We expect those customers to migrate their entire centers to 800G. Eventually, other data centers may adopt 800G however at the moment AI is the only application driving the current need.
As technology and requirements shift, it seems that Luxshare Technology may be ahead of ADVA in bringing a product to market in 2024 using POET’s optical interposer technology. POET has an 800G receive optical engine ready and is working to release the transmit side with both DML and EML lasers. By next year POET should also have optical engines for a 1.6T pluggable design available.
Below we show what a customer is doing now for an 800G 2xFR4 transceiver using POET’s receiver optical engine and a silicon photonics-based transmitter.
…and what it can do with a POET’s receiver plus Infinity transmitter engines:
The stock currently trades at a fully diluted enterprise value of $49 million. According to Yole Group, the optical transceiver market is rising at a CAGR of 15% from $10.4 billion in 2021 to about $24.7 billion in 2027. POET’s product is a component of an optical transceiver and the market is about a third of the transceiver market. If POET can secure even a small portion of that market with its unique offering, its valuation should far exceed its current price. We believe the stock could be worth $5.60 per share based on 2026 revenues at 6.3xs EV to Sales, discounted at 30% back to present value.