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Strong Components & Systems Growth Aids LITE Stock: More Upside Ahead?
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Key Takeaways
LITE now expects to exceed its $650M revenue midpoint guidance earlier than previously projected.
More than 60% of LITE's revenue is driven by AI infrastructure and hyperscaler cloud demand.
Fiscal Q2 growth is split evenly between cloud components and systems products for data centers.
Lumentum’s (LITE - Free Report) prospects ride on strong AI demand that is driving adoption of its laser chips and optical transceivers inside data centers. LITE estimates that more than 60% of its current revenues come from AI infrastructure and cloud, driven by strong demand from hyperscalers. The company now expects to exceed revenue-midpoint guidance of roughly $650 million, a couple of quarters earlier than it previously targeted.
LITE has evolved as a leading provider of optics for scaling AI. Cloud transceivers, optical circuit switches and co-packaged optics are long-term growth drivers for the systems segment. Lumentum expects sustainable growth from cloud transceivers (flat in the first quarter of 2026) over the next four to five quarters, beginning in the second quarter of fiscal 2026. Rapid manufacturing expansion in Thailand bodes well for cloud transceivers and optical circuit switches.
The company expects roughly half of the sequential growth in the second quarter of fiscal 2026 to be driven by component products serving cloud applications. The other half is expected from LITE’s systems products serving cloud customers, driven by growing demand for high-speed optical transceivers for data center applications.
Lumentum expects fiscal second-quarter revenues between $630 million and $670 million, while earnings are anticipated to be $1.30-$1.50 per share. The Zacks Consensus Estimate for revenues is currently pegged at $652.4 million, suggesting 62.2% growth from the figure reported in the year-ago quarter.
LITE Faces Tough Competition in Cloud and Networking Space
Lumentum competes against Ciena (CIEN - Free Report) and Marvell Technology (MRVL - Free Report) in the AI infrastructure space. Ciena is a leading provider of optical networking equipment, software and services, while Marvell Technology is a competitor in optical networking for AI and data center applications.
Ciena is benefiting from improvements in customer spending owing to the rapid proliferation of AI applications. CIEN continues to benefit from higher network traffic and demand for bandwidth, which are mainly attributed to increasing AI technology use cases. Ciena’s cloud and service provider customers are prioritizing network investments to support AI-driven traffic growth, highlighting long-term opportunities for its Systems and Interconnects businesses. The company lifted its fiscal 2026 revenues outlook to $5.7-$6.1 billion, reflecting nearly 24% growth at the midpoint.
Marvell Technology is gaining from the adoption of scale-up switches that connect AI accelerators within and across racks, requiring multi-terabit bandwidth and ultra-low latency. These switches will support both open standard Ethernet and UALink fabrics, leveraging Marvell Technology’s low-latency SerDes and Ethernet switch IP. MRVL announced that leading AI and data center infrastructure companies are now adopting its Alaska PCIe 6 retimer product line to support next-generation accelerated AI infrastructure.
Lumentum shares have appreciated 386.8% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 27.1%.
LITE Stock Outperforms Sector
Image Source: Zacks Investment Research
The LITE stock is trading at a premium, with a forward 12-month price/sales of 8.6X compared with the Zacks Communications Components industry’s 4.47X. Lumentum has a Value Score of F.
LITE Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $5.76 per share, up by 9 cents over the past 30 days. Lumentum reported earnings of $2.06 per share for fiscal 2025.
Image: Bigstock
Strong Components & Systems Growth Aids LITE Stock: More Upside Ahead?
Key Takeaways
Lumentum’s (LITE - Free Report) prospects ride on strong AI demand that is driving adoption of its laser chips and optical transceivers inside data centers. LITE estimates that more than 60% of its current revenues come from AI infrastructure and cloud, driven by strong demand from hyperscalers. The company now expects to exceed revenue-midpoint guidance of roughly $650 million, a couple of quarters earlier than it previously targeted.
LITE has evolved as a leading provider of optics for scaling AI. Cloud transceivers, optical circuit switches and co-packaged optics are long-term growth drivers for the systems segment. Lumentum expects sustainable growth from cloud transceivers (flat in the first quarter of 2026) over the next four to five quarters, beginning in the second quarter of fiscal 2026. Rapid manufacturing expansion in Thailand bodes well for cloud transceivers and optical circuit switches.
The company expects roughly half of the sequential growth in the second quarter of fiscal 2026 to be driven by component products serving cloud applications. The other half is expected from LITE’s systems products serving cloud customers, driven by growing demand for high-speed optical transceivers for data center applications.
Lumentum expects fiscal second-quarter revenues between $630 million and $670 million, while earnings are anticipated to be $1.30-$1.50 per share. The Zacks Consensus Estimate for revenues is currently pegged at $652.4 million, suggesting 62.2% growth from the figure reported in the year-ago quarter.
LITE Faces Tough Competition in Cloud and Networking Space
Lumentum competes against Ciena (CIEN - Free Report) and Marvell Technology (MRVL - Free Report) in the AI infrastructure space. Ciena is a leading provider of optical networking equipment, software and services, while Marvell Technology is a competitor in optical networking for AI and data center applications.
Ciena is benefiting from improvements in customer spending owing to the rapid proliferation of AI applications. CIEN continues to benefit from higher network traffic and demand for bandwidth, which are mainly attributed to increasing AI technology use cases. Ciena’s cloud and service provider customers are prioritizing network investments to support AI-driven traffic growth, highlighting long-term opportunities for its Systems and Interconnects businesses. The company lifted its fiscal 2026 revenues outlook to $5.7-$6.1 billion, reflecting nearly 24% growth at the midpoint.
Marvell Technology is gaining from the adoption of scale-up switches that connect AI accelerators within and across racks, requiring multi-terabit bandwidth and ultra-low latency. These switches will support both open standard Ethernet and UALink fabrics, leveraging Marvell Technology’s low-latency SerDes and Ethernet switch IP. MRVL announced that leading AI and data center infrastructure companies are now adopting its Alaska PCIe 6 retimer product line to support next-generation accelerated AI infrastructure.
LITE’s Share Price Performance, Valuation & Estimates
Lumentum shares have appreciated 386.8% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 27.1%.
LITE Stock Outperforms Sector
Image Source: Zacks Investment Research
The LITE stock is trading at a premium, with a forward 12-month price/sales of 8.6X compared with the Zacks Communications Components industry’s 4.47X. Lumentum has a Value Score of F.
LITE Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $5.76 per share, up by 9 cents over the past 30 days. Lumentum reported earnings of $2.06 per share for fiscal 2025.
Lumentum Holdings Inc. Price and Consensus
Lumentum Holdings Inc. price-consensus-chart | Lumentum Holdings Inc. Quote
Lumentum currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.