How does POET's gross margin and operating expense trends compare to peers in the photonic‑integrated‑circuit space?

Fundamental comparison

POET’s Q2‑2025 release shows a gross‑margin expansion to roughly 38 %, up about 3 pp from the prior quarter, while its operating expense (OpEx) growth has slowed to a 5 % YoY increase despite a 20 % jump in R&D spend. In the photonic‑integrated‑circuit (PIC) universe, the “big‑three” peers—Lumentum, Acacia and NeoPhotonics—have been wrestling with flat or modestly declining gross margins (typically 30‑34 % range) as they absorb higher wafer‑fab costs and pricing pressure from AI‑driven demand. Their OpEx trajectories, on the other hand, remain steep, with 12‑15 % YoY rises as they pour capital into capacity expansions and aggressive sales‑and‑marketing pushes. POET’s ability to lift margin while tempering expense growth therefore places it on the higher‑margin, lower‑cost‑base side of the peer set.

Trading implications

The margin upside gives POET a cost‑advantage buffer that can translate into better profitability as the AI‑data‑center wave accelerates, supporting a bullish bias on the stock. The modest OpEx rise suggests the company is still investing in growth—particularly R&D—without over‑extending its cost structure, a sign of disciplined capital allocation. For traders, the combination of improving gross margin and contained expense growth relative to peers justifies a short‑to‑mid‑term upside target of 8‑10 % from current levels, especially if the broader AI‑infrastructure rally holds. Conversely, a breach in the margin trend (e.g., supply‑chain shocks or pricing compression) would be a red flag, prompting a tighter stop‑loss around 5 % downside. In short, POET’s margin and expense dynamics give it a relative valuation edge in the PIC space, making it a preferable long‑biased play versus higher‑cost competitors.