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Lumentum's Components Business Accelerates: More Upside Ahead?
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Key Takeaways
LITE Components revenues jumped 77% YoY to a record $533.3M in Q3 FY26.
Lumentum saw record EML shipments as AI networking demand drove strong optical component sales.
LITE is expanding capacity through its North Carolina indium phosphide fab acquisition.
Lumentum Holdings’ (LITE - Free Report) Components business is accelerating rapidly, fueled by surging AI and cloud infrastructure demand that continues to strengthen the company’s long-term growth outlook. In third-quarter fiscal 2026, Components revenues jumped 77% year over year to a record $533.3 million, supported by exceptional demand for EML laser chips, pump lasers and DCI components. Lumentum achieved record 100G and 200G EML shipments, while 200G EML revenues more than doubled sequentially. Management also noted that narrow linewidth laser shipments rose more than 120% year over year, and pump laser shipments increased 80%.
Importantly, many of these critical optical components are effectively sold out for the foreseeable future, reflecting strong pricing power and persistent supply-demand imbalance across AI networking markets. Lumentum’s products are increasingly essential for hyperscale AI data centers, where high-speed optical connectivity is becoming critical for scaling compute clusters efficiently.
The company expects continued expansion in co-packaged optics (CPO), scale-across networking and optical circuit switching technologies — all of which rely heavily on its advanced photonics portfolio. LITE is also expanding manufacturing capacity through its newly acquired North Carolina indium phosphide fab to support years of future demand growth.
Recent developments continue to reinforce the bullish outlook. NVIDIA’s strategic partnership and $2 billion investment highlight LITE’s rising role in AI optical infrastructure. Backed by strong AI networking demand, Lumentum appears well-positioned for sustained revenue acceleration and margin expansion. The Zacks Consensus Estimate for fiscal 2026 revenues stands at $2.99 billion, implying 82.03% year-over-year growth.
Lumentum Faces Rising AI Optics Competition
Coherent Corp. (COHR - Free Report) is becoming a major rival to Lumentum in AI optics and telecom networking. The company benefits from its broad photonics portfolio, strong manufacturing scale and expansion in 800G, 1.6T, OCS and CPO technologies. COHR is rapidly expanding its 6-inch indium phosphide platform to improve yields and lower costs. Coherent also strengthened its AI position through a strategic partnership and multiyear CPO agreement with NVIDIA Corporation.
Applied Optoelectronics, Inc. (AAOI - Free Report) is rapidly strengthening its position in AI-driven optical networking markets against Lumentum. The company is expanding 800G and 1.6T manufacturing capacity while investing heavily in co-packaged optics and indium phosphide laser production. AAOI’s vertically integrated laser manufacturing capabilities help improve supply-chain control and reduce industry shortage risks. Applied Optoelectronics also benefits from flexible automated manufacturing systems supporting multiple high-speed transceiver platforms.
Lumentum’s shares have surged 179.7% year to date, significantly outperforming the Zacks Computer and Technology sector’s 15.4% gain and the Zacks Communication – Components industry’s 133.1% rise.
LITE’s YTD Price Performance
Image Source: Zacks Investment Research
LITE trades at a premium with a forward 12-month P/E ratio of 65.38X compared with the sector's forward earnings multiple of 25.45. LITE carries a Value Score of F.
LITE’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.21 per share, up 6.8% over the past 30 days and reflecting impressive growth of 298.54% year over year.
View the Zacks #1 Rank List
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Lumentum's Components Business Accelerates: More Upside Ahead?
Key Takeaways
Lumentum Holdings’ (LITE - Free Report) Components business is accelerating rapidly, fueled by surging AI and cloud infrastructure demand that continues to strengthen the company’s long-term growth outlook. In third-quarter fiscal 2026, Components revenues jumped 77% year over year to a record $533.3 million, supported by exceptional demand for EML laser chips, pump lasers and DCI components. Lumentum achieved record 100G and 200G EML shipments, while 200G EML revenues more than doubled sequentially. Management also noted that narrow linewidth laser shipments rose more than 120% year over year, and pump laser shipments increased 80%.
Importantly, many of these critical optical components are effectively sold out for the foreseeable future, reflecting strong pricing power and persistent supply-demand imbalance across AI networking markets. Lumentum’s products are increasingly essential for hyperscale AI data centers, where high-speed optical connectivity is becoming critical for scaling compute clusters efficiently.
The company expects continued expansion in co-packaged optics (CPO), scale-across networking and optical circuit switching technologies — all of which rely heavily on its advanced photonics portfolio. LITE is also expanding manufacturing capacity through its newly acquired North Carolina indium phosphide fab to support years of future demand growth.
Recent developments continue to reinforce the bullish outlook. NVIDIA’s strategic partnership and $2 billion investment highlight LITE’s rising role in AI optical infrastructure. Backed by strong AI networking demand, Lumentum appears well-positioned for sustained revenue acceleration and margin expansion. The Zacks Consensus Estimate for fiscal 2026 revenues stands at $2.99 billion, implying 82.03% year-over-year growth.
Lumentum Faces Rising AI Optics Competition
Coherent Corp. (COHR - Free Report) is becoming a major rival to Lumentum in AI optics and telecom networking. The company benefits from its broad photonics portfolio, strong manufacturing scale and expansion in 800G, 1.6T, OCS and CPO technologies. COHR is rapidly expanding its 6-inch indium phosphide platform to improve yields and lower costs. Coherent also strengthened its AI position through a strategic partnership and multiyear CPO agreement with NVIDIA Corporation.
Applied Optoelectronics, Inc. (AAOI - Free Report) is rapidly strengthening its position in AI-driven optical networking markets against Lumentum. The company is expanding 800G and 1.6T manufacturing capacity while investing heavily in co-packaged optics and indium phosphide laser production. AAOI’s vertically integrated laser manufacturing capabilities help improve supply-chain control and reduce industry shortage risks. Applied Optoelectronics also benefits from flexible automated manufacturing systems supporting multiple high-speed transceiver platforms.
LITE’s Share Price Performance, Valuation & Estimates
Lumentum’s shares have surged 179.7% year to date, significantly outperforming the Zacks Computer and Technology sector’s 15.4% gain and the Zacks Communication – Components industry’s 133.1% rise.
LITE’s YTD Price Performance
Image Source: Zacks Investment Research
LITE trades at a premium with a forward 12-month P/E ratio of 65.38X compared with the sector's forward earnings multiple of 25.45. LITE carries a Value Score of F.
LITE’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.21 per share, up 6.8% over the past 30 days and reflecting impressive growth of 298.54% year over year.
Image Source: Zacks Investment Research
Lumentum sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.