Why Lumentum Stock Soared This Week
Key Points
The AI data center buildout is driving demand for Lumentum's connectivity solutions.
The optical tech leader's growth is accelerating.
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Shares of Lumentum (NASDAQ: LITE) surged more than 40% this past week, according to data from S&P Global Market Intelligence, after its quarterly earnings report was well-received by investors.
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Business is booming
Lumentum's revenue jumped 65.5% year over year to $665.5 million in its fiscal 2026 second quarter, which ended on Dec. 27.
The company's optical and photonic technologies are key components of artificial intelligence (AI) and cloud computing systems, enabling faster, more efficient data transfer.
"We are now recognized as a foundational engine of the AI revolution," CEO Michael Hurlston said during a conference call with analysts. "Virtually every AI network is powered by Lumentum technology, either through our direct hyperscaler partnerships or as the critical component supplier that enables our network equipment manufacturer customers."
Moreover, Lumentum's profitability is improving as it scales its operations. Its adjusted operating margin expanded by 17 percentage points to 25.2%.
Lumentum's adjusted net income, in turn, skyrocketed by 380% to $143.9 million, or $1.67 per share. That was well above Wall Street's estimates, which had called for per-share profits of $1.41.
The AI data center buildout is still ramping up
For its fiscal third quarter, Lumentum expects revenue to grow roughly 85% to between $780 million and $830 million. Management also projects adjusted operating margins of 30% to 31% and earnings per share of $2.15 to $2.35.
"Our results continue to highlight the strength of our roadmaps for both optical components and systems, which make us mission-critical to the world's AI leaders," Hurlston said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Lumentum. The Motley Fool has a disclosure policy.
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