Lumentum Holdings – Company Overview & Investment Thesis

Lumentum Holdings – The Optical Backbone Behind AI Data Centers

Lumentum Holdings (NASDAQ: LITE) is a critical player in AI data centers. AI gets most of the headlines from chips like GPUs and TPUs, but without ultra-fast optical networks, those chips cannot function at scale. This is where Lumentum plays a key role.

What Is Lumentum?

Lumentum Holdings was formed in 2015 as a spin-off from the Optical Fiber Products division of JDS Uniphase (JDSU). It inherited over 45 years of optical and laser technology expertise, including a strong portfolio of patents. Today, Lumentum is a key supplier of optical and photonic technologies used across AI data centers, cloud infrastructure, telecom networks, and industrial applications.

Lumentum’s Product Portfolio

·       Data Center optics

·       DCI, Metro, Long-Haul & Submarine networking

·       Industrial lasers

·       Sensing and VCSEL (Vertical-Cavity Surface-Emitting Laser) solutions

Why Lumentum Is Critical for AI & Data Centers

AI data centers require massive amounts of data to move instantly between GPUs and TPUs. Lumentum provides optical and laser technologies that enable extremely high data speeds, lower power consumption, and scalable AI cluster performance.

How Lumentum’s Technology Works

·       AI data centers contain thousands of chips that must communicate at extreme speeds.

·       Lumentum makes tiny lasers and optical components that convert electronic data into light.

·       This light travels through fibre-optic cables, replacing slower electrical wires.

·       Optical transmission enables higher speed and lower power consumption.

·       Without these optics, AI data centers would face severe performance bottlenecks.

Lumentum Share Performance

Lumentum’s share price rose approximately 700% during 2025, from USD 53 to USD 375. In the most recent quarter, the company reported a GAAP profit for the first time after several years of losses. Trading volumes have increased sharply, indicating strong institutional and retail investor interest.

Latest Quarterly Results (Q1 FY2026 – Sept 2025)

Lumentum Clients

Lumentum sells its products primarily through OEMs and third-party suppliers. These OEMs integrate Lumentum’s optical and laser components into networking and data-center equipment used by major cloud and AI companies such as Alphabet (Google), Amazon, and Apple. Lumentum also supplies optical components to leading network equipment providers including Nokia, Cisco, and ZTE.

Key Risks

·       Heavy dependence on AI and data-center capital spending cycles

·       Revenue concentration among a small number of large customers

·       Strong competition and rapid technological change

·       Supply-chain and component availability risks

Final Thoughts (Opinion)

Lumentum’s stock is currently showing strong price-action characteristics, supported by accelerating AI infrastructure demand and improving profitability. In my personal opinion, the stock may approach the USD 400 level in the near term, subject to broader market conditions.

Important Non-FCA Disclosure

This content is provided for general information and opinion and educational purposes only. This publication is not regulated by the UK Financial Conduct Authority (FCA) and does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The information presented is based on publicly available sources and personal analysis and may be inaccurate or incomplete. Investing in equities involves risk, including the loss of capital. Past performance is not indicative of future results. Readers should conduct their own research and, where appropriate, seek advice from a qualified, FCA-authorised financial adviser before making any investment decisions.