Finn Stockinger
Equity Analyst & Investor, Technology Research
Lumentum's AI demand is no longer a future story; it is already showing up in the numbers. Cloud and AI revenue more than doubled year over year, with components up 103% and systems up 123%. 200G EML shipments hit a record above 25% of EML revenue, CPO laser shipments are growing toward meaningful revenue by year-end, pump lasers rose 80% under long-term supply deals, initial 1.6T transceivers shipped, and the OCS ramp is on track under a multi-year, multibillion-dollar agreement. x.com
Lumentum's Raman pump lasers could benefit as more inter-site AI network spending shifts to optical line systems. Cignal AI forecasts those systems taking 57% of this spending by 2030, up from 29% in 2026, and identifies Raman amplification as a major cost driver and pump lasers as one of the tightest supply-chain components. Lumentum offers those lasers and the amplifiers built around them. x.com
Optics and photonics should be among AI's biggest winners as faster GPU networks need optical connections that suppliers cannot expand quickly enough. Lumentum says some components are sold out through early 2029; Sivers is investing $30M to target more than 100M lasers a year, with operations expected in Q4 2027. Potential US restrictions on Chinese transceivers could reshape supply in 2027. Applied Optoelectronics and Sivers are the favorites. x.com x.com
Lumentum requires paying up heavily for a company that is not yet making money. Revenue grew 109% year over year, but it trades at about 25 times annualized sales, and it is growing less than memory makers at ten times their valuation. @ZeekTyt cites Lumentum's CEO expecting to supply only about 30% of requested laser demand as CPO and NPO ramp in 2027, with balance around 2029-30. x.com x.com
Rising 1.6T switching demand favors optical suppliers, though their execution risks vary. Bank of America says the market could grow ~101% annually through 2030. Marvell's leading DSPs and Lumentum's supply-short 200G EML lasers are lowest risk; Applied Optoelectronics' capacity expansion and Fabrinet's customer concentration make them medium risk. Aeluma remains pre-commercial, while Lightwave Logic's polymer modulators are a high-risk moonshot despite its TSM partnership. x.com
Lumentum is seeing very bullish demand signals across near-package optics, lasers and links between data centers. Management sees NPO expanding the optical TAM, with about six core customers and revenue of $50M–$100M in Q4 2026 rising above $100M in Q1 2027. Lasers remain undersupplied: EML orders run into 2027 at rising prices. Lumentum holds about 80% of pump lasers, which it aims to quadruple by early 2028 as AI clusters spread across sites, with contract visibility over three years. x.com … Show more
Lumentum is a great business, but at $954 its risk/reward is not attractive. Applying 30x to fiscal 2028 non-GAAP EPS of $40 gives a 2027 price target of $1,200, about 26% upside, or roughly 15% after adjusting for execution, financial, technology and supply risks. Reaching it needs on-time manufacturing ramps, sustained pricing power and cash flow without excessive dilution. Lost pricing power plus slipping OCS or laser ramps would break the thesis; a significant dip would offer a better entry. … Show more
Lumentum is a leader in AI laser supply, where demand will outstrip supply into 2027, per Samsung Securities. Its edge is technology and scale: it launched a 1.6T DR4 transceiver using 200G-per-lane EML in March 2026, holds 50-60% of the high-end laser chip market with an EML seen as the industry gold standard, and its co-packaged optics should enter volume production from mid-2027. Coherent is its main rival, with vertical integration and 6-inch InP wafers as cost advantages. x.com
Lumentum stock should still perform strongly as OCS, CPO and cloud transceivers could reach 60% of revenue by 2030, more than offsetting even a full EML loss. Beyond TFLN cannibalizing 400G/lane EML modulation in 3-plus years, a shift from one laser per lane to two CW lasers for eight lanes could reduce laser sales in 3-5 years. x.com
Lumentum and Coherent face a threat from microLED optics, which could replace laser optics with 20x less power and no temperature sensitivity by late 2027. The use case is short-reach, high-volume links under 30 meters. The copper versus optics debate is a distraction, since every AI cluster needs both and Credo now does both while Applied Optoelectronics handles long-haul; the bigger question is what microLED does to laser makers. x.com x.com
Lumentum, Coherent and Applied Optoelectronics remain buys amid AI optics demand: Lumentum's CEO said its AI optical parts are completely sold out through early 2029. x.com
