Roundhill launches NCLD and LYTE ETFs to target AI compute and optical networking

Roundhill's Photonics & Optics ETF (BATS:LYTE) began trading on Aug. 6 with $72 million in first-day volume, outpacing the opening session of the firm's earlier Memory ETF, DRAM, in another sign of investor demand for narrowly targeted AI infrastructure trades. LYTE, which started on the Cboe BZX exchange with a 0.65% expense ratio, holds 12 companies focused on photonics and optics, including businesses tied to lasers, fiber-optic components and optical networking gear used to move data through AI-era data centers. The launch came alongside the Neocloud ETF (NASDAQ:NCLD), which targets AI compute infrastructure providers. The fund adds a live market debut to Roundhill's broader strategy of carving the AI buildout into specialized ETF exposures rather than broad technology baskets. Existing disclosures for LYTE showed major positions including Lumentum Holdings, Coherent, Eoptolink Technology, Zhongji Innolight and Tianfu Communication. Roundhill has argued that optical interconnects are becoming increasingly important as data centers replace copper links with faster, more efficient light-based connections, and previously said the AI optical module market is expected to grow 57% this year from $16.5 billion to $26 billion. LYTE is the second dedicated photonics ETF to reach the market after Tema's LAZR fund launched on June 30. Its debut follows the rapid rise of DRAM, which launched on April 2, reached $1 billion in assets under management within 10 days, later grew to roughly $25 billion and at one point in May drew $1.1 billion of inflows in a single trading day. The back-to-back launches of DRAM, NCLD and LYTE underscore how ETF issuers are slicing the AI infrastructure value chain into ever narrower themes, while also highlighting the concentration risk that comes with funds built around a small number of holdings.