Morgan Stanley: Zhongji Innolight: Earnings Estimates Raised
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Key Views
The report upgrades 2026–2028 industry AI optical module shipment forecasts from 53/71/80 million units to 73/141/150 million units, with the steeper 2027–2028 revision reflecting a more optimistic 1.6T demand outlook. The industry TAM is projected to expand from USD 18 billion in 2025 to USD 102 billion by 2028. Demand is accelerating as scale-out, scale-up, and scale-across architectures drive broader adoption.
Innolight is a first mover in commercializing 800G and 1.6T modules and is expected to maintain leadership at the 3.2T node. Long-standing partnerships with global CSPs, tight joint R&D, and differentiated new product introductions support faster yield improvements and cost reductions. NPO and OCS technologies could serve as incremental growth drivers beyond 2026–2028.
Outlook
The upgraded model implies 2026–2028 revenue and net profit CAGRs of 53% and 66%, respectively. Revenue forecasts for 2026–2027 were raised 36%–138%, driven by a 38%–98% increase in high-end module shipment projections. Gross margin estimates were lifted 0.9–3.1 ppt on a richer product mix. Key risks include CPO disruption timing, competitive intensity, and geopolitical or tariff-related supply chain volatility.
Recommended Securities
- Zhongji Innolight (300308.SZ): Rating and target price not disclosed per applicable policy. Closing price on July 17, 2026: RMB 979.46.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
