Photonics stocks are trading at elevated valuations relative to the broader market, making timing critical as sentiment can shift rapidly between optimism and pessimism about AI spending returns.

"Coherent trades at around 35 times forward earnings, per FactSet, while Lumentum has a multiple of 42. The S & P 500, meanwhile, has a price-to-earnings ratio of 20. Those high valuations make timing each trade particularly important."