Optical networking has become one of the market’s hottest AI themes this year. Cloud companies are upgrading their data-center networks and replacing more copper connections with optical ones to handle the huge amounts of data AI systems require. That shift has sent demand higher for companies that make optical components, and many of their stocks have outperformed the broader tech sector.
Lumentum Holdings (LITE) is a clear example. LITE stock has gained 155% this year, well ahead of the 35% rise in the Technology Select Sector SPDR Fund (XLK), and is up 473% over the past 52 weeks.
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www.barchart.comThe latest boost came Monday, when Lumentum announced a joint AI optical-connectivity demonstration with Qualcomm Technologies (QCOM) and Corning (GLW) at ECOC 2026. The companies will show a high-density optical die-to-die, or D2D, system designed for AI scale-up systems. Lumentum shares rose 2.4% in premarket trading after the news, with the stock last trading near $937 and holding an 88% “Buy” rating.
Still, after a gain of more than 465% in a year and with shares near record highs, does this partnership still mark yet another leg of Lumentum's AI growth story? Let’s find out.
Inside the Corning-Qualcomm Partnership
Lumentum announced on Sept. 21 that it will demonstrate a high-density optical connection with Qualcomm and Corning at ECOC 2026 in Málaga, Spain. The setup brings together Qualcomm Technologies’ chip-to-chip interface technology, Lumentum's 1060-nanometer VCSEL lasers, and Corning’s high-density fiber connections.
The demonstration uses 32-gigabit-per-second optical channels and can move about 1 terabit of data per second for every millimeter of chip edge. The companies say the design could eventually reach 4 Tb/s/mm with faster channels and more connections. Lumentum's optical engine can send and receive roughly 10 Tb/s in total. More importantly, the technology can carry data across tens of meters while using less power and producing less delay than traditional electrical links at those distances.
The partnership could put Lumentum's lasers closer to AI chips in future systems that use co-packaged optics and standards such as UCIe. But this is still a demonstration, not a supply deal or a source of near-term revenue. For now, it shows what the three companies can build together and could help draw interest from future customers. Investors liked the news, pushing LITE stock up 2.53% to $954.49 on Sept. 21.
Lumentum’s Earnings and Growth Drivers
Lumentum reported a strong fiscal Q4 2026, as demand for its data center products continued to climb. Revenue came in at $1.006 billion, up 109.3% from a year earlier and ahead of Wall Street’s $988.6 million estimate. Components revenue rose 102.7% to $649.4 million, while Systems revenue jumped 122.6% to $356.9 million.
Profitability improved, too. Adjusted gross margin rose to 50.4%, operating margin reached 36.6%, and adjusted EPS of $3.23 beat the $2.99 consensus estimate. Lumentum reported a $7.16 billion GAAP loss, but that mostly came from a one-time, noncash $7.8 billion charge related to its convertible notes, not weakness in the underlying business. For fiscal Q1 2027, management expects $1.225 billion to $1.275 billion in revenue and adjusted EPS of $4.05 to $4.35.
Lumentum is also spending to meet future demand. Its 1060-nanometer VCSEL platform, shown at OFC 2026 and used in the project with Qualcomm Technologies Inc. and Corning Inc., is designed for high-speed links between AI chips. The company has shipped more than 10 billion of these laser emitters. It is also building a 240,000-square-foot factory in Greensboro to make advanced indium-phosphide lasers. Nvidia (NVDA) is among its customers. Production is not expected to start until mid-2028, but the expansion shows Lumentum is preparing for sustained demand from large AI data centers.
Wall Street’s View on LITE Stock
Lumentum is set to report its next quarterly results on Nov. 3. Wall Street expects the company to earn $3.82 per share for the September quarter, up 536.67% from $0.60 a year ago. For fiscal 2027, analysts expect earnings of $19.78 per share, up 143.30% from $8.13 in fiscal 2026.
Analysts remain bullish after Lumentum Holdings’ latest earnings report. J.P. Morgan analyst Joseph Cardoso kept a “Buy” rating and raised his price target to $1,280 from $1,165. Wolfe Research analyst George Notter also kept a “Buy” rating and a $1,200 target. Craig-Hallum analyst Richard Shannon reiterated his “Buy” rating with a $1,150 target, pointing to the company’s better-than-expected results and growing data center opportunity.
All 24 analysts tracked rate LITE stock a consensus “Strong Buy.” Their average price target is $1,138.12, which suggests 21% upside from current levels.
www.barchart.comConclusion
Lumentum’s partnership with Qualcomm and Corning adds another promising layer to its AI story, showing that its VCSEL technology could play a role in the next generation of high-speed connections inside AI systems. Still, this is a technology demonstration, not a revenue-producing contract, so investors should not overstate its near-term financial impact. With earnings accelerating, margins expanding, and capacity investments aimed at AI demand, Lumentum’s underlying momentum remains strong. Given its massive run, LITE could see some volatility or profit-taking in the near term, but the shares appear more likely to trend higher over time if management continues converting AI demand into growth.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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