Editing Openai/69109937-2170-8005-9304-da49840bb5b9 (section)

=== Assistant: You’re right to poke me about Globetronics and NationGate – that was a good hint. ===
You’re right to poke me about Globetronics and NationGate – that was a good hint. Let me fix the manufacturing picture first, then I’ll put on the “cold-blooded investor” hat and talk scenarios.

==== Today the physical build-out is basically: ====
* Globetronics (Malaysia, Penang) - Contract manufacturer for optical engines (800G and up). - Master agreement + purchase agreement signed Dec 2024; they’re building a full wafer-scale assembly and test line for POET engines. POET Technologies<ref>{{cite web|title=POET Technologies|url=https://www.poet-technologies.com/news/poet-technologies-signs-manufacturing-agreement-with-globetronics-in-malaysia|publisher=POET Technologies|access-date=2025-11-10}}</ref>
* NationGate Solutions (Malaysia, Penang) - Joined mid-2025 as second manufacturing partner. - Focus: assembling & testing optical engine assemblies and light-source products, incl. a custom fiber-attach unit for a key AI customer. POET Technologies<ref>{{cite web|title=POET Technologies|url=https://www.poet-technologies.com/news/poet-signs-manufacturing-agreement-with-nationgate-solutions-in-malaysia|publisher=POET Technologies|access-date=2025-11-10}}</ref>
* SPX (Super Photonics Xiamen) - POET has acquired SPX and now controls that operation; it complements the Malaysian sites and adds capacity for 800G+ engines. PIC (Photonics Integrated Circuits)<ref>{{cite web|title=PIC (Photonics Integrated Circuits)|url=https://picmagazine.net/article/120853/POET_acquires_Super_Photonics_Xiamen|publisher=PIC (Photonics Integrated Circuits)|access-date=2025-11-10}}</ref>

So: not “SPX is history”, but SPX + Globetronics + NationGate is now the triangle they use to scale to ~1M+ engines/year, with Malaysia as the main volume hub.

Thanks for calling out the earlier simplification – that’s exactly the kind of thing that can go stale if I don’t re-check with fresh sources.

==== Current ballpark (Nasdaq: POET): Yahoo Finanzen<ref>{{cite web|title=Yahoo Finanzen|url=https://finance.yahoo.com/quote/POET/|publisher=Yahoo Finanzen|access-date=2025-11-10}}</ref> ====

POET Technologies Inc (POET)$5.39+$0.06(+1.22%)November 7$5.50+$0.11(+2.04%)After Hours1D5D1M6MYTD1Y5YmaxOpen5.11Volume10.8MDay Low4.98Day High5.56Year Low3.09Year High9.41
* Price: ~5.4 USD
* Market cap: roughly 0.5–0.7 B USD
* Revenue: still tiny (sub-1 M USD trailing twelve months) with very high P/S multiple (hundreds). FullRatio<ref>{{cite web|title=FullRatio|url=https://fullratio.com/stocks/nasdaq-poet/poet-technologies|publisher=fullratio.com|access-date=2025-11-10}}</ref>
* Fresh cash: - US$75 M strategic investment closed Oct 2025. optics.org<ref>{{cite web|title=optics.org|url=https://optics.org/news/16/10/21|publisher=optics.org|access-date=2025-11-10}}</ref> - US$150 M oversubscribed registered direct offering just closed; pro-forma cash said to be 300 M+ USD. Investing News Network (INN)<ref>{{cite web|title=Investing News Network (INN)|url=https://investingnews.com/poet-technologies-announces-closing-of-us-150-million-oversubscribed-registered-direct-offering-of-common-shares/|publisher=Investing News Network (INN)|access-date=2025-11-10}}</ref>
* First real production order: >US$5 M for 800G Infinity engines from a “leading systems integrator” (not just NRE). POET Technologies<ref>{{cite web|title=POET Technologies|url=https://www.poet-technologies.com/news/poet-technologies-receives-5-million-production-order-for-800g-optical-engines|publisher=POET Technologies|access-date=2025-11-10}}</ref>

So investors are paying ~0.5–0.7 B for a company that has:
* Lots of design wins + partners,
* Serious capex and cash to scale,
* But no proven high-volume revenue yet.

This is classic “late-stage tech gamble” territory: upside can be big, but the valuation already assumes something goes right.

==== Not investment advice, obviously – just a structured way to think about it. I’ll use loose price ranges to avoid fake precision. ====

===== Rough 3–5 year price range: 0–2 USD =====

What has to go wrong:
* Manufacturing never quite stabilises: yields at Globetronics/NationGate and SPX stay mediocre; too much spread in coupling, reliability issues under thermal cycling, lots of rework.
* Customers don’t scale orders: pilots and low-volume orders continue (like the current 5 M order), but nobody commits to real AI-cluster volumes; Celestial, Luxshare, FIT etc. either delay or quietly pivot to alternatives.
* Cash gets burned ahead of revenue: - They have >300 M in the bank now, but heavy capex, opex, and acquisitions eat that over a few years without the corresponding ramp. optics.org<ref>{{cite web|title=optics.org|url=https://optics.org/news/16/10/21|publisher=optics.org|access-date=2025-11-10}}</ref> - The market realises revenue will be far below the AI hype narrative → multiple compression and possibly another dilutive raise at low prices.
* Market re-rates all AI-plumbing names: If AI data-center capex slows or investors rotate away from speculative hardware, multiples can be savage.

In that world, the equity drifts toward:
* “Cash plus IP value”,
* Or, in a truly bad outcome, a take-under / asset sale where shareholders only get a fraction of today’s cap.

Given today’s ~5.4 USD price, a worst-case 0–2 USD is not outrageous. We’ve seen this movie with many photonics names before.

===== Rough 3–5 year price range: 5–12 USD =====

This is the “boringly successful” outcome.

What it looks like:
* Globetronics + NationGate + SPX ramp to meaningful volume - Yield improves gradually; customers sign additional production orders (like the recent 5 M order, but larger and repeated). POET Technologies<ref>{{cite web|title=POET Technologies|url=https://www.poet-technologies.com/news/poet-technologies-receives-5-million-production-order-for-800g-optical-engines|publisher=POET Technologies|access-date=2025-11-10}}</ref> - 800G engines go into volume in 2026; 1.6T and some AI-fabric products follow a year or two later.
* Revenue climbs, but not explosively - Say low tens of millions → mid-tens of millions USD over a few years, not hundreds of millions yet. - Gross margins decent but not spectacular at the beginning (manufacturing learning curve).
* Valuation compresses somewhat as the story matures - Right now you have an enormous P/S because there’s almost no “S” – pure story stock. FullRatio<ref>{{cite web|title=FullRatio|url=https://fullratio.com/stocks/nasdaq-poet/poet-technologies|publisher=fullratio.com|access-date=2025-11-10}}</ref> - As revenue appears, the market may reward lower risk, but also apply a more normal multiple (e.g. 8–15× sales instead of 800×). - The share price can still go up if revenue ramps fast enough, but there’s also a real chance that the stock goes mostly sideways while the business “grows into” its valuation.

Why the range 5–12 USD?
* Downside within this “success” case: - If multiple compresses faster than revenue grows, you can easily end up around today’s price or slightly below (5–7 USD) even with decent execution.
* Moderate upside: - If they hit, say, 50–80 M USD of revenue with decent margins and the market still assigns a growthy fibre-optic multiple, a 1–1.5 B market cap is not crazy → roughly 10–15 USD per share, depending on final share count.

So in the base case you don’t automatically get your “10-bagger”; you get a real company with moderate upside and non-trivial execution risk on the way.

===== Rough 3–5 year price range: 20–40 USD (and beyond if everything really clicks) =====

This is the full-throttle bull story people dream about:
* POET firmly becomes the “default” optical-engine supplier for a non-trivial slice of AI data-centre and CPO markets: - Multiple hyperscalers adopt products via Luxshare / Foxconn / others. - Celestial-style AI fabrics ship in numbers, with POET’s light engines baked into their solutions. - Sivers+POET ELS for CPO actually takes off around end-2026 as planned. PR Newswire<ref>{{cite web|title=PR Newswire|url=https://www.prnewswire.com/news-releases/sivers-semiconductors-partners-with-poet-technologies-to-deliver-innovative-light-engines-and-strengthen-serviceable-market-offerings-in-next-gen-ai-infrastructure-302606753.html|publisher=PR Newswire|access-date=2025-11-10}}</ref>
* Revenue runs into the hundreds of millions - Think 200–400 M USD+ annual sales within 5 years, with attractive gross margins if passive alignment really delivers cost advantage at scale.
* Valuation: still high, but justified by growth - At that point you’re not a tiny speculative any more; you’re a meaningful photonics player in a structural growth market. - A tech market might easily give 5–10× sales to a company growing 30–40 %+ per year, which would be 1–4 B USD market cap.

Rough translation into per-share price:
* 1 B market cap → about 2× today → low teens.
* 2–3 B → roughly 20–30 USD.
* 4 B+ with continued hype → 30–40 USD+.

Is this impossible? No. Is it already partly in the price? Also yes. The market knows AI optical connectivity is hot; the current ~0.5–0.7 B cap reflects that. Yahoo Finanzen<ref>{{cite web|title=Yahoo Finanzen|url=https://finance.yahoo.com/news/poet-technologies-stock-buy-110000055.html|publisher=Yahoo Finanzen|access-date=2025-11-10}}</ref>

==== Purely qualitative probabilities (my view, not gospel): ====
* Worst case (0–2 USD): maybe 25–30 % - Manufacturing + commercial execution can still go wrong; dilution risk is real despite current cash pile.
* Base case (5–12 USD): roughly 40–50 % - Gradual, messy but essentially successful ramp, valuation multiple compresses, business becomes real but not spectacular.
* Best case (20–40 USD+): maybe 20–30 % - Requires that AI optical demand actually explodes and POET captures a meaningful share while keeping its tech moat and manufacturing advantage.

If you put those together, you get a very skewed payoff structure:
* Left tail: you can lose most of your capital.
* Right tail: you can plausibly get a multi-bagger.
* Middle: a lot of paths where you end up with modest gains or even flat performance while the company slowly de-risks.

That’s exactly why some analyses call it a “small, speculative shot” rather than a core holding. Seeking Alpha<ref>{{cite web|title=Seeking Alpha|url=https://seekingalpha.com/article/4826663-poet-technologies-is-worth-a-small-speculative-shot|publisher=Seeking Alpha|access-date=2025-11-10}}</ref>

From a critical perspective, I’d actually challenge the typical retail narrative here:
* Many people talk as if the best case is the default,
* But the current valuation already assumes some success; there is not much margin of safety if execution slips or AI capex cools.

If you want, next step we could do is:
* Take one of these scenarios and build a rough revenue → margin → market-cap → share-price table, so you can see how sensitive the outcome is to just one or two assumptions (e.g. “share of AI transceiver TAM” and “EV/Sales multiple”). That usually helps to keep one’s own optimism in check.

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