Lumentum vs. Sandisk: Which Tech Stock Is the Better Buy in November?

As the digital economy expands, choosing the right infrastructure backbone is essential for long-term growth. Should you bet on Lumentum (NASDAQ:LITE) or Sandisk (NASDAQ:SNDK) for your portfolio?

Lumentum focuses on optical and photonic technologies that power high-speed data centers, while Sandisk specializes in flash-memory solutions for everything from consumer gadgets to massive cloud systems. Both play critical roles in the artificial intelligence build-out, making them top contenders in the hardware space.

The case for Lumentum

Lumentum designs and manufactures optical components that enable high-speed data transmission for cloud infrastructure and telecommunications. The company serves a diverse range of industries, including industrial manufacturing and sensing, but relies heavily on a small group of major customers.

In its latest annual report, the company noted that Customer A accounted for nearly 26.6% of net revenue and Customer B accounted for 15%. Customer concentration like this adds a layer of risk to the business because the loss of one partner can drastically impact the bottom line.

Financial performance recently showed a massive surge in top-line growth. As of the June-ending fiscal year, trailing 12-month revenue reached $3 billion, representing a year-over-year increase of approximately 83%.

However, despite this growth, the company reported a net loss of nearly $6.9 billion for the period due to a one-time non-operating loss. Operating income, measuring profit before interest and taxes, was $525 million, an improvement over fiscal 2025's $180 million loss.

The balance sheet remains relatively stable despite the reported net loss. As of its June 2026 balance sheet, the debt-to-equity ratio is roughly 0.4x, meaning the company has $0.40 of total debt for every dollar of shareholder equity. The current ratio, which measures a company's ability to cover its short-term debts with its short-term assets, is approximately 1.7x.

Fiscal 2026 free cash flow, which is the cash left over after paying for capital investments, was $300 million. Note that stock-based compensation accounted for roughly 22.7% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back to cash flow. Investors often monitor semiconductor stocks like Lumentum for their role in next-generation networking.

The case for Sandisk

Sandisk operates as a vertically integrated producer of flash-memory and storage technologies. It sells its products to original equipment manufacturers, cloud service providers, and retailers across the gaming, automotive, and data center markets. Unlike many of its peers, the company maintains a broad customer base, with no single client accounting for more than 10% of net revenue in fiscal year 2026. This diversification helps provide more stable demand and reduces the risk of relying on a handful of large contracts.

The growth trajectory for the storage specialist has been explosive. In fiscal 2026 (ending in July), revenue reached $20 billion, an increase of approximately 175% over the previous fiscal period. This growth translated into substantial profitability, with net income totaling nearly $11.4 billion.

The financial foundation appears very robust based on the July 2026 balance sheet. The debt-to-equity ratio is approximately 0x, showing the company carries negligible total debt relative to its equity. Its current ratio is close to 2.3x, which compares a firm's liquid assets to its short-term liabilities.

Free cash flow for the year reached nearly $11.5 billion, representing cash generated after accounting for spending on buildings and equipment. Stock-based compensation was only 2% of cash from operations, meaning reported cash flows are largely derived from actual business transactions.

Risk profile comparison

Lumentum faces significant pressure from global trade dynamics and export control laws. U.S. government restrictions have already ended Huawei's relationship with the U.S., and potential new tariffs could further impact its sales to China.

Sandisk is heavily dependent on its Flash Ventures partnership with Kioxia for its supply of memory wafers. This arrangement requires the company to pay half of the fixed costs regardless of the actual output, creating financial strain if market demand unexpectedly drops. The company also faces stiff competition from industry giants such as Micron Technology, Samsung Electronics, and its former parent Western Digital. Managing manufacturing operations concentrated in Asia also leaves the company vulnerable to regional geopolitical instability or supply chain disruptions.

Valuation comparison

Sandisk appears significantly more attractive on a price basis, sporting a much lower earnings multiple than its peer.

Valuation metrics include those sourced from Financial Modeling Prep (FMP) and may differ from those of other data providers.

The P/S ratio measures market cap divided by sales over the past twelve months. The Forward P/E ratio compares the stock price to its future earnings estimates for the coming year.

Which stock would I buy in 2026?

Sandisk may offer higher upside over the next year, but the challenge is trying to predict what happens if supply catches up to demand in the next three years. As a long-term investor, I would rather buy Lumentum right now. Its forward P/E is higher, but it should deliver steadier earnings growth.

During Citi's 2026 Global TMF conference in September, Lumentum's President of Global Business Units Wupen Yuen said: "Demand is just absolutely crazy." The company doesn't expect laser supply gaps to close anytime soon.

For Sandisk, soaring prices and margins from flash memory are causing a flood of new capital to go toward meeting supply. But the long-term customer agreements that many suppliers are signing are not enough to cover all revenue if selling prices weaken as supply catches up to demand.

With Sandisk, investors are faced with the double-edged risk of a slowdown in AI data center spending and the negative impact of lower memory prices. Lumentum doesn't face the same degree of pricing risk as Sandisk, which operates in an industry notorious for boom-and-bust cycles, which is why Lumentum stock commands a higher valuation.

Moreover, Lumentum should benefit over the long term as AI models become more complex and advanced. This is expected to shift more spending toward optical interconnects, providing a tailwind for long-term growth. As someone not looking to trade, but to stick with a growth stock that can compound in value over many years, I would rather hold Lumentum.

Citigroup is an advertising partner of Motley Fool Money. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lumentum, Micron Technology, Viavi Solutions, and Western Digital. The Motley Fool has a disclosure policy.