We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Lumentum's AI Laser Chip Momentum Builds: More Upside Ahead?
Read MoreHide Full Article
Key Takeaways
LITE posted record EML shipments, with AI laser chips driving strong revenue growth.
LITE said laser chip volumes doubled year over year; EML shipments may rise 50% by December 2026.
LITE's CPO laser chip ramp stays on track, backed by new capacity and a 2027 purchase order.
Lumentum Holdings’ (LITE - Free Report) AI laser chip business is expanding rapidly, positioning the company to capitalize on the growing demand for AI infrastructure and high-speed optical networking. LITE’s latest quarterly results underscore this momentum, with laser chips emerging as one of the key drivers behind record revenue growth. The company achieved another quarterly record in EML (electro-absorption modulated laser) shipments, fueled by strong adoption of 100G and 200G lane technologies. Notably, revenues from 200G EML products more than doubled sequentially, reflecting accelerating customer demand.
The momentum appears sustainable. Management disclosed that laser chip volumes doubled year over year in the fiscal third quarter and expects EML unit shipments to grow more than 50% by the December 2026 quarter compared with the prior-year period. Moreover, wafer fabrication capacity in Japan remains fully allocated, underscoring robust demand and providing strong visibility into future revenue growth.
Lumentum is also broadening its growth runway through co-packaged optics (CPO), a key technology expected to support next-generation AI data centers. The company’s ultra-high-power laser chip ramp for CPO applications remains on track, with meaningful revenues expected later this year and a multihundred-million-dollar purchase order scheduled for delivery in the first half of 2027. Additionally, collaborations with multiple CPO customers further strengthen its long-term prospects.
To support future demand, Lumentum recently expanded its manufacturing footprint through the acquisition of an indium phosphide fabrication facility in North Carolina. These developments, combined with strong AI-driven demand, record laser chip shipments and emerging CPO opportunities, indicate LITE’s AI laser chip business still has significant room for growth.
Lumentum Faces Rising Competition in AI Networking
Coherent Corp. (COHR - Free Report) is emerging as a major rival to Lumentum in AI networking and photonics, supported by strong demand for AI-driven optical networking. COHR is rapidly expanding its 800G and 1.6T transceivers, Optical Circuit Switch (OCS) systems and Co-Packaged Optics solutions. A key strength of the company is its proprietary 6-inch indium phosphide platform, which boosts capacity and lowers costs. Backed by a strategic NVIDIA partnership and growing production scale, COHR is well-positioned to capitalize on long-term AI infrastructure growth.
Applied Optoelectronics (AAOI - Free Report) is becoming a strong competitor to Lumentum as demand for AI infrastructure and hyperscale data centers accelerates. AAOI is seeing robust growth in 800G and 1.6T optical transceivers, with demand exceeding production capacity through mid-2027. A key advantage for the company is its vertically integrated manufacturing model, including in-house indium phosphide laser production. AAOI is also expanding manufacturing capacity and advancing co-packaged optics solutions, strengthening its position in AI connectivity, optical networking and photonics growth.
LITE trades at a premium with a forward 12-month P/S ratio of 12.48X compared with the industry's 6X. 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
Image: Bigstock
Lumentum's AI Laser Chip Momentum Builds: More Upside Ahead?
Key Takeaways
Lumentum Holdings’ (LITE - Free Report) AI laser chip business is expanding rapidly, positioning the company to capitalize on the growing demand for AI infrastructure and high-speed optical networking. LITE’s latest quarterly results underscore this momentum, with laser chips emerging as one of the key drivers behind record revenue growth. The company achieved another quarterly record in EML (electro-absorption modulated laser) shipments, fueled by strong adoption of 100G and 200G lane technologies. Notably, revenues from 200G EML products more than doubled sequentially, reflecting accelerating customer demand.
The momentum appears sustainable. Management disclosed that laser chip volumes doubled year over year in the fiscal third quarter and expects EML unit shipments to grow more than 50% by the December 2026 quarter compared with the prior-year period. Moreover, wafer fabrication capacity in Japan remains fully allocated, underscoring robust demand and providing strong visibility into future revenue growth.
Lumentum is also broadening its growth runway through co-packaged optics (CPO), a key technology expected to support next-generation AI data centers. The company’s ultra-high-power laser chip ramp for CPO applications remains on track, with meaningful revenues expected later this year and a multihundred-million-dollar purchase order scheduled for delivery in the first half of 2027. Additionally, collaborations with multiple CPO customers further strengthen its long-term prospects.
To support future demand, Lumentum recently expanded its manufacturing footprint through the acquisition of an indium phosphide fabrication facility in North Carolina. These developments, combined with strong AI-driven demand, record laser chip shipments and emerging CPO opportunities, indicate LITE’s AI laser chip business still has significant room for growth.
Lumentum Faces Rising Competition in AI Networking
Coherent Corp. (COHR - Free Report) is emerging as a major rival to Lumentum in AI networking and photonics, supported by strong demand for AI-driven optical networking. COHR is rapidly expanding its 800G and 1.6T transceivers, Optical Circuit Switch (OCS) systems and Co-Packaged Optics solutions. A key strength of the company is its proprietary 6-inch indium phosphide platform, which boosts capacity and lowers costs. Backed by a strategic NVIDIA partnership and growing production scale, COHR is well-positioned to capitalize on long-term AI infrastructure growth.
Applied Optoelectronics (AAOI - Free Report) is becoming a strong competitor to Lumentum as demand for AI infrastructure and hyperscale data centers accelerates. AAOI is seeing robust growth in 800G and 1.6T optical transceivers, with demand exceeding production capacity through mid-2027. A key advantage for the company is its vertically integrated manufacturing model, including in-house indium phosphide laser production. AAOI is also expanding manufacturing capacity and advancing co-packaged optics solutions, strengthening its position in AI connectivity, optical networking and photonics growth.
LITE’s Share Price Performance, Valuation & Estimates
Lumentum’s shares have surged 132% year to date, significantly outperforming the Zacks Computer and Technology sector’s 21.4% gain and the Zacks Communication – Components industry’s 116.7% rise.
LITE’s YTD Price Performance
Image Source: Zacks Investment Research
LITE trades at a premium with a forward 12-month P/S ratio of 12.48X compared with the industry's 6X. 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 flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.