Abstract-Multilevel pulse amplitude modulation (M -PAM) is gaining momentum for high-capacity and power-efficient cloud computing. Compared to the classic on-off keying (OOK) modulation, high-order PAM yields better spectral efficiency but is also more susceptible to physical layer degradation effects. We develop a cross-layer analysis framework to examine PAM transmission performance in data center network environments supporting both optical multicasting and wavelength routing. Our analysis is conducted on a switch architecture based on an arrayed-waveguide grating (AWG) core and distributed broadcast domains, exhibiting different physical paths, and random, uncontrolled crosstalk noise. Reed-Solomon coding with rate adaptation is incorporated into PAM transceivers to compensate for impairments. Our Monte Carlo simulations point to the significant impact of AWG crosstalk on higher-order PAM in wavelength-reuse architectures and the importance of code rate adaptation for signals traversing multiple routing stages. According to our study, 8-PAM offers the highest effective bit rates for signals terminating in one broadcast domain and performs poorly when considering interdomain connectivity. On the other hand, the impairment-induced degradation of interdomain capacity for 4-PAM can be limited to 20.4%, making it better suited for connections spanning two broadcast domains and a crosstalkrich stage. Our results call for software-defined PAM transceiver designs in support of both modulation order and code rate adaptation.Index Terms-Arrayed waveguide grating (AWG), bit error rate (BER), data center, forward error correction (FEC), goodput, optical multicast, physical layer, pulse amplitude modulation (PAM).