We report the observation of optical stability for a plane parallel semiconductor crystal which forms a Fabry‐Perot interferometer using only the natural reflectivity of its surfaces. Nonlinear transmission is observed for cw laser intensities above ∼ 100 W/cm2for radiation at 1895 cm−1near the energy gap of InSb at 5 K. The effect is interpreted in terms of a very large intensity‐dependent refractive index giving a 5&lgr;/2 optical thickness change for an intensity of ∼2 kW/cm2. Clear bistability is seen in fifth‐order interference, the first such observation above first order in an intrinsic, one‐element system, in addition to regions exhibiting signal amplification. The same crystal also shows strong modulation of the transmission of one laser beam induced by a second, with real signal gain, thus demonstrating an ’’optical transistor.’’