Third Bridge experts on CPO:
> Despite the hype, mass commercial adoption is not expected before the second half of 2027. Traditional pluggable optical modules are expected to remain the industry standard throughout 2026.> CPO is likely to see early adoption in "scale-out" networking (connecting switches, GPUs, and CPUs) within distances under 500 meters. Deployment into GPUs themselves and "scale-up" chip-level systems is a harder engineering challenge, likely not seeing broad adoption until 2030–2032.> Experts note that training workloads (which require extreme bandwidth) are better suited for CPO, while inference workloads are deterministic and remain well-supported by traditional pluggable modules.> A primary hurdle for CPO is maintenance. With traditional pluggable modules, a failed component can be hot-swapped. With CPO, a failure in the optical subsystem might require replacing an entire board, leading to significantly higher costs and operational disruption.> Nvidia and Broadcom are expected to dominate the CPO market, potentially controlling 70% of it by 2028. Nvidia is expected to capture around 50% market share through its leadership in AI infrastructure, while Broadcom could secure roughly 20% through continued expansion of its deployment footprint. > Large cloud providers (like Google, Meta, AWS, Microsoft) are cautious about CPO because it risks "vendor lock-in." Pluggable modules allow these companies to mix and match components from various vendors, whereas CPO ecosystems are more restrictive.> Through substantial investments in optical component companies like Coherent and Lumentum, Nvidia is positioning itself to control the entire AI value chain—from GPUs and networking switches to the optical modules themselves.> Experts expect pluggable optical modules to remain the dominant solution for cloud giants such as Microsoft and Amazon throughout 2026. CPO adoption is expected to begin in earnest during 2027, reaching approximately 20% to 30% penetration by 2028.
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