Lumentum sees sales more than double as AI demand swells

By Hannah Pedone

Though Lumentum posts blowout earnings and an upbeat forecast, its stock rises only modestly after hours

Lumentum shares have surged roughly 600% in the past 12 months.

Optical stocks have recaptured investors' interest lately, but Lumentum's blowout earnings report is being met with a ho-hum response.

Lumentum (LITE) posted sales for the latest quarter that more than doubled and issued a forecast that vastly exceeded analysts' expectations. But its stock rose just 2% in after-hours trading on Tuesday.

For the first quarter of the 2027 fiscal year that just began, Lumentum expects revenue in the range of $1.225 billion to $1.275 billion, as well as adjusted earnings per share between $4.05 and $4.35. Analysts tracked by FactSet had been looking for $1.157 billion and $3.61, respectively.

The company reported revenue of $1.01 billion for the fourth quarter, up 109% from the prior-year period. The FactSet consensus was for $987.7 million in revenue.

Lumentum posted adjusted EPS of $3.23 for the fourth quarter, up 267% from last year. Wall Street was expecting $2.97. And the company's adjusted gross margin of 50.4% exceeded the 48% that analysts had projected.

CEO Michael Hurlston said on the earnings call that Lumentum previously expected to hit that margin milestone once its quarterly revenue run rate reached $2 billion, but it was actually able to do so "quite a bit sooner" than that.

He said in a statement that Lumentum is positioned "at the heart of a secular industry shift."

"As AI compute workloads increase in both speed and bandwidth, data-center architects are turning to optical links as a primary means of connectivity," he said.

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Lumentum's stock has been a major gainer over the past 12 months, as networking components like transceivers and lasers have proven essential to data-center buildouts - such that they're now in short supply. Shares of Lumentum are up more than 600% in the past year.

Mizuho analyst Vijay Rakesh wrote in a note earlier this month that one thing working in Lumentum's favor is that it's a key supplier of optical equipment for Nvidia (NVDA).

In March, the chip giant invested $2 billion in Lumentum to support its optics technology and research.

Also in March, Lumentum announced a new U.S. manufacturing facility in Greensboro, N.C., to produce lasers for data centers. Nvidia will serve as a customer for the facility, and the company previously said that it is expected to ramp production in mid-2028.

Hurlston said on the earnings call that he would have more updates "over the next couple of quarters" as the company looks to increase its capacity.

-Hannah Pedone

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08-11-26 2015ET