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Lumentum to Demonstrate DWDM ELSFP at ECOC 2026: What's Ahead?
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Key Takeaways
Lumentum plans to demonstrate an eight-wavelength DWDM ELSFP module for CPO and NPO at ECOC 2026.
LITE expects ultra-high-power laser chip demand for CPO scale-up connectivity to ramp up in 2H 2027.
Lumentum is expanding capacity as 1.6T transceiver adoption is expected to strengthen through 2027.
Lumentum Holdings (LITE - Free Report) is benefiting from rising demand for optical connectivity across artificial intelligence (AI) data centers as hyperscalers increasingly shift from copper toward optical links. The company’s cloud and AI momentum is being supported by strength across high-power lasers, 200G EMLs, CW lasers, 1.6T transceivers and optical circuit switching. Narrow-linewidth laser assembly shipments increased more than 130% year over year in the fourth quarter of fiscal 2026, while pump-laser shipments rose more than 80%. Lumentum also expects pump-laser shipments to increase roughly fourfold over the next several quarters.
Building on this momentum, Lumentum announced plans to demonstrate an eight-wavelength DWDM external laser small form factor pluggable (ELSFP) module for Optical Connectivity Interoperability Multi-Source Agreement applications at ECOC 2026. The new module is designed for next-generation co-packaged optics (CPO) and near-packaged optics (NPO) architectures, broadening Lumentum’s participation in emerging AI scale-up connectivity. The development complements LITE’s existing ultra-high-power laser platform and reinforces its push into external light-source solutions as optical engines move closer to AI accelerators and switches.
The announcement fits Lumentum’s broader CPO and NPO strategy. The company expects demand for ultra-high-power laser chips for CPO scale-up connectivity to ramp up in the second half of calendar 2027, ahead of customer deployments in 2028. LITE has received its first external light-source module purchase order for delivery in the second half of 2027. Meanwhile, multiple customers are evaluating NPO as an intermediate step toward CPO, expanding Lumentum’s addressable optical market. Its CPO/NPO laser family spans 120-, 150- and 400-milliwatt output levels, supporting both integrated optical engines and external light-source modules.
Lumentum is broadening manufacturing capacity to support growing AI-driven optical demand. The company is expanding capacity across its indium phosphide wafer fabs in Japan to support 200G and 300G lane-speed opportunities. Lumentum began shipping 1.6T transceivers in the fourth quarter of fiscal 2026, with management expecting adoption to intensify in the first quarter of fiscal 2027 and remain strong through calendar 2027. The company is also expanding its U.S. manufacturing footprint, including a new Greensboro, NC, facility that is expected to begin ramping production in mid-2028. These developments strengthen LITE’s competitive positioning against Marvell Technology (MRVL - Free Report) and Applied Optoelectronics (AAOI - Free Report) .
LITE Faces Tough Competition
Marvell is strengthening its position across CPO, NPO, silicon photonics, optical DSPs, TIAs, drivers and switching. Its internally developed NPO light engine and Celestial AI Photonic Fabric broaden its scale-up optics exposure. Marvell noted that NPO is progressing in parallel with CPO, with multiple customers evaluating these architectures. The company is also combining optics with purpose-built scale-up switches, enabling it to offer a more integrated connectivity platform. Management indicated that stronger customer engagement has increased its scale-up optics revenue expectations for fiscal 2028.
AAOI is expanding aggressively in CPO. It plans to ramp ELSFP production through 2027 and targets roughly 400,000 units per month in 2028. The company is expanding in-house laser capacity in Texas and said several customers have already qualified its CPO laser technology. AAOI is also focusing on next-generation DWDM CPO lasers and ELSFP modules. Management expects high-power laser demand to rise materially as CPO adoption broadens, with its vertically integrated laser manufacturing helping support supply, cost control and customer qualification efforts.
Shares of Lumentum have appreciated 159% year to date, outperforming the broader Zacks Computer and Technology sector’s 19.9% growth.
LITE Stock’s Price Performance
Image Source: Zacks Investment Research
LITE stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 39.49 compared with the broader sector’s 20.85. Lumentum has a Value Score of F.
LITE’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lumentum’s earnings is currently pegged at $4.22 per share, down by a cent over the past 30 days, suggesting 283.64% year-over-year growth.
View the Zacks #1 Rank List
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Lumentum to Demonstrate DWDM ELSFP at ECOC 2026: What's Ahead?
Key Takeaways
Lumentum Holdings (LITE - Free Report) is benefiting from rising demand for optical connectivity across artificial intelligence (AI) data centers as hyperscalers increasingly shift from copper toward optical links. The company’s cloud and AI momentum is being supported by strength across high-power lasers, 200G EMLs, CW lasers, 1.6T transceivers and optical circuit switching. Narrow-linewidth laser assembly shipments increased more than 130% year over year in the fourth quarter of fiscal 2026, while pump-laser shipments rose more than 80%. Lumentum also expects pump-laser shipments to increase roughly fourfold over the next several quarters.
Building on this momentum, Lumentum announced plans to demonstrate an eight-wavelength DWDM external laser small form factor pluggable (ELSFP) module for Optical Connectivity Interoperability Multi-Source Agreement applications at ECOC 2026. The new module is designed for next-generation co-packaged optics (CPO) and near-packaged optics (NPO) architectures, broadening Lumentum’s participation in emerging AI scale-up connectivity. The development complements LITE’s existing ultra-high-power laser platform and reinforces its push into external light-source solutions as optical engines move closer to AI accelerators and switches.
The announcement fits Lumentum’s broader CPO and NPO strategy. The company expects demand for ultra-high-power laser chips for CPO scale-up connectivity to ramp up in the second half of calendar 2027, ahead of customer deployments in 2028. LITE has received its first external light-source module purchase order for delivery in the second half of 2027. Meanwhile, multiple customers are evaluating NPO as an intermediate step toward CPO, expanding Lumentum’s addressable optical market. Its CPO/NPO laser family spans 120-, 150- and 400-milliwatt output levels, supporting both integrated optical engines and external light-source modules.
Lumentum is broadening manufacturing capacity to support growing AI-driven optical demand. The company is expanding capacity across its indium phosphide wafer fabs in Japan to support 200G and 300G lane-speed opportunities. Lumentum began shipping 1.6T transceivers in the fourth quarter of fiscal 2026, with management expecting adoption to intensify in the first quarter of fiscal 2027 and remain strong through calendar 2027. The company is also expanding its U.S. manufacturing footprint, including a new Greensboro, NC, facility that is expected to begin ramping production in mid-2028. These developments strengthen LITE’s competitive positioning against Marvell Technology (MRVL - Free Report) and Applied Optoelectronics (AAOI - Free Report) .
LITE Faces Tough Competition
Marvell is strengthening its position across CPO, NPO, silicon photonics, optical DSPs, TIAs, drivers and switching. Its internally developed NPO light engine and Celestial AI Photonic Fabric broaden its scale-up optics exposure. Marvell noted that NPO is progressing in parallel with CPO, with multiple customers evaluating these architectures. The company is also combining optics with purpose-built scale-up switches, enabling it to offer a more integrated connectivity platform. Management indicated that stronger customer engagement has increased its scale-up optics revenue expectations for fiscal 2028.
AAOI is expanding aggressively in CPO. It plans to ramp ELSFP production through 2027 and targets roughly 400,000 units per month in 2028. The company is expanding in-house laser capacity in Texas and said several customers have already qualified its CPO laser technology. AAOI is also focusing on next-generation DWDM CPO lasers and ELSFP modules. Management expects high-power laser demand to rise materially as CPO adoption broadens, with its vertically integrated laser manufacturing helping support supply, cost control and customer qualification efforts.
LITE’s Share Price Performance, Valuation & Estimates
Shares of Lumentum have appreciated 159% year to date, outperforming the broader Zacks Computer and Technology sector’s 19.9% growth.
LITE Stock’s Price Performance
Image Source: Zacks Investment Research
LITE stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 39.49 compared with the broader sector’s 20.85. Lumentum has a Value Score of F.
LITE’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lumentum’s earnings is currently pegged at $4.22 per share, down by a cent over the past 30 days, suggesting 283.64% year-over-year growth.
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.