Lumentum Holdings (LITE) AI Stock Analysis

• Market Cap: $49.58B
• Dividend Yield: N/A
• Average Volume (3M): 5.29M
• Price to Earnings (P/E): 88.8
• Beta (1Y): 2.55
• Revenue Growth: 33.62%
• EPS Growth: N/A
• Country: US
• Employees: 7,257
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 1.67
• Shares Outstanding: 71,400,000
• 10 Day Avg. Volume: 5,270,246
• 30 Day Avg. Volume: 5,289,634
• PEG Ratio: -2.41
• Price to Book (P/B): 5.76
• Price to Sales (P/S): 3.97
• P/FCF Ratio: -62.44
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 23.35
• Enterprise Value/Gross Profit: 69.82
• Enterprise Value/Ebitda: 152.56
• 1Y Price Target: $632.93
• Price Target Upside: -7.03% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): 7.6
• Revenue Forecast (FY): $2.88B

• Rating: 61 Neutral
• Price Target: $739.00 ▲(8.55% Upside)
• Action: Reiterated Date: 03/03/26
• Date: Action: Reiterated 03/03/26

The score is driven by strong technical momentum and a very positive guidance/demand outlook (record results, large backlog, and accelerating AI/cloud-driven ramps). Offsetting that, the financial profile is constrained by high leverage and uneven cash-flow conversion, and valuation is demanding with an extremely high P/E.

Positive Factors

Large OCS backlog

A >$400M OCS backlog provides multi‑quarter revenue visibility and supports sustained production planning and CAPEX allocation. This backlog underpins long‑term revenue ramps into 2027, reducing near‑term demand uncertainty and enabling scale economics for higher margin system shipments.

NVIDIA strategic partnership & financing

A strategic $2B investment from NVIDIA with purchase commitments and capacity access materially strengthens financing and demand certainty. It accelerates U.S. manufacturing expansion and joint R&D, anchoring long‑term customer relationships and capacity for AI/cloud optics market growth.

Indium phosphide capacity expansion progress

Proactive front‑loading of >50% of a planned 40% wafer expansion and multi‑site capacity visibility improves production throughput and reduces future supply tightness. This operational investment supports durable supply for cloud/AI customers and enhances ability to capture higher‑ASP product mix long term.

Negative Factors

High leverage

A ~3.9x debt‑to‑equity ratio materially constrains financial flexibility and raises refinancing and covenant risk if demand softens. Elevated leverage limits the firm's ability to absorb execution hiccups or fund additional CAPEX without dilutive or costly financing, impacting strategic optionality.

Uneven cash conversion

Positive but volatile cash flow with weak conversion versus net income signals that earnings gains may not reliably translate to cash. This variability complicates debt servicing and sustained CAPEX funding, increasing execution risk over multiple quarters and limiting reinvestment capacity.

Supply and execution bottlenecks

A 25%–30% supply gap and strained back‑end capacity create a structural execution constraint. Dependence on contract manufacturers and facility reconfigurations increases operational complexity and shipment risk, threatening the timing of backlog conversion and margin realization over coming quarters.

Lumentum Holdings Business Overview & Revenue Model

Company Description

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments, Optical Communications (OpComms) and Commercial Lasers (Lasers). The OpComms segment offers components, modules, and subsystems that enable the transmission and transport of video, audio, and data over high-capacity fiber optic cables. It offers tunable transponders, transceivers, and transmitter modules; tunable lasers, receivers, and modulators; transport products, such as reconfigurable optical add/drop multiplexers, amplifiers, and optical channel monitors, as well as components, including 980nm, multi-mode, and Raman pumps; and switches, attenuators, photodetectors, gain flattening filters, isolators, wavelength-division multiplexing filters, arrayed waveguide gratings, multiplex/de-multiplexers, and integrated passive modules. This segment also provides Super Transport Blade, which integrates optical transport functions into a single-slot blade; vertical-cavity surface-emitting lasers; directly modulated and electro-absorption modulated lasers; and laser illumination sources for 3D sensing systems. It serves customers in telecommunications, data communications, and consumer and industrial markets. The Commercial Lasers segment offers diode-pumped solid-state, fiber, diode, direct-diode, and gas lasers for use in original equipment manufacturer applications. It serves customers in markets and applications, such as sheet metal processing, general manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining. Lumentum Holdings Inc. was incorporated in 2015 and is headquartered in San Jose, California.

How the Company Makes Money

Lumentum generates revenue through the sale of its optical and laser products, which are critical in telecommunications infrastructure, data centers, and industrial applications. The company's revenue model is primarily based on the sale of its products to original equipment manufacturers (OEMs) and system integrators. Key revenue streams include optical components, such as lasers and transceivers, and commercial laser products used in manufacturing and material processing. Significant partnerships with major telecommunications companies and technology firms enhance Lumentum's market reach and provide a steady demand for its products, contributing to its overall earnings. The company's focus on innovation and adaptation to emerging market needs, such as 5G and advanced manufacturing solutions, further supports its revenue growth.

Lumentum Holdings Financial Statement Overview

Summary

Operating results are recovering (TTM revenue +14.3% and net margin ~12%), but the balance sheet is a major constraint with very high leverage (TTM debt-to-equity ~3.9x). Cash flow has improved (TTM FCF $130M) yet remains uneven with weak cash conversion and sharp negative FCF growth, keeping overall financial quality below average despite the rebound.

Income Statement

Results are improving meaningfully versus the prior down-cycle year, with TTM (Trailing-Twelve-Months) revenue up 14.3% and net margin recovering to ~12%. However, profitability quality is mixed: operating margin remains slightly negative in TTM (Trailing-Twelve-Months) and prior years show volatility (large loss in FY2024 and losses in FY2023). Gross margin has also compressed versus FY2021–FY2022 levels, suggesting the recovery is still in progress.

Balance Sheet

Leverage is the key constraint. TTM (Trailing-Twelve-Months) debt-to-equity is ~3.9x, up materially from ~0.6x in FY2021 and ~1.0x in FY2022, reflecting a much more debt-heavy capital structure. While return on equity is positive in TTM (Trailing-Twelve-Months) (~12%), equity is relatively modest versus total debt, leaving less balance-sheet flexibility if end-market demand weakens or margins slip.

Cash Flow

Cash generation is positive but uneven. TTM (Trailing-Twelve-Months) operating cash flow is $247M and free cash flow is $130M, a rebound from negative free cash flow in FY2024–FY2025 (annual). That said, cash conversion versus earnings looks weak in TTM (Trailing-Twelve-Months) (operating cash flow relative to net income is low), and free cash flow growth is sharply negative, highlighting volatility and execution risk in translating the income recovery into consistent cash.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	2.11B	1.65B	1.36B	1.77B	1.71B	1.71B
Gross Profit	704.00M	459.90M	251.50M	569.00M	788.60M	788.60M
EBITDA	322.20M	106.80M	-81.60M	188.70M	482.40M	482.40M
Net Income	251.60M	25.90M	-546.50M	-131.60M	198.90M	198.90M
Balance Sheet
Total Assets	4.81B	4.22B	3.93B	4.63B	4.16B	3.55B
Cash, Cash Equivalents and Short-Term Investments	1.16B	877.10M	887.00M	2.01B	2.55B	1.95B
Total Debt	3.35B	2.61B	2.56B	2.87B	1.94B	1.24B
Total Liabilities	3.96B	3.08B	2.97B	3.28B	2.29B	1.58B
Stockholders Equity	846.60M	1.13B	957.30M	1.36B	1.88B	1.97B
Cash Flow
Free Cash Flow	130.30M	-104.70M	-111.30M	51.30M	368.10M	643.90M
Operating Cash Flow	247.00M	126.30M	24.70M	179.80M	459.30M	738.70M
Investing Cash Flow	-305.50M	-84.10M	-114.30M	-874.00M	-226.30M	1.00M
Financing Cash Flow	236.50M	41.80M	-332.70M	263.00M	282.90M	-263.40M

Lumentum Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 680.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LITE, the sentiment is Positive. The current price of 680.8 is above the 20-day moving average (MA) of 625.07, above the 50-day MA of 472.31, and above the 200-day MA of 237.34, indicating a bullish trend. The MACD of 76.10 indicates Negative momentum. The RSI at 61.58 is Neutral, neither overbought nor oversold. The STOCH value of 62.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LITE.

Lumentum Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIEN	73 Outperform	$47.12B	219.00	4.45%	―	18.79%	49.53%
VIAV	63 Neutral	$7.54B	-21.27	-5.54%	―	15.60%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LITE	61 Neutral	$49.58B	88.82	29.27%	―	33.62%	―
EXTR	54 Neutral	$1.91B	70.53	12.43%	―	14.31%	―
PI	50 Neutral	$3.41B	-469.76	-6.04%	―	4.24%	-141.83%

Lumentum Holdings Corporate Events

Lumentum Raises $2 Billion, Deepens NVIDIA Strategic Partnership

On March 2, 2026, Lumentum completed a $2 billion private placement of 2,876,415 shares of Series A Convertible Preferred Stock to NVIDIA at $695.31 per share, issued under a Securities Purchase Agreement between the companies. The preferred stock converts one-for-one into common shares after antitrust waiting periods expire or upon a qualified sale, participates in dividends and liquidation on an as-converted basis, carries voting rights alongside common stock except in director elections and has no preemptive or redemption rights.

The financing is tied to a broader multi-year strategic partnership under which NVIDIA made a multibillion-dollar purchase commitment and secured future capacity access for advanced laser components from Lumentum. The deal is expected to help Lumentum expand U.S.-based manufacturing via a new fabrication facility and deepen joint R&D in state-of-the-art optics and silicon photonics, positioning both companies to support the rapid build-out of next-generation AI data centers and large-scale “AI factory” infrastructure.

The most recent analyst rating on (LITE) stock is a Buy with a $800.00 price target. To see the full list of analyst forecasts on Lumentum Holdings stock, see the LITE Stock Forecast page.

Lumentum Announces Chief Accounting Officer Succession Plan

On December 29, 2025, Lumentum Holdings Inc. announced that Chief Accounting Officer and Senior Vice President, Finance, Matthew Sepe plans to retire in fall 2026, and will remain as Senior Vice President, Finance until that time while stepping down from the Chief Accounting Officer role effective on the later of February 6, 2026 or the filing date of the company’s quarterly report for the period ended December 27, 2025. In connection with this planned leadership transition in its finance organization, the board appointed Eric Chang, currently Senior Vice President, Finance and a seasoned finance executive with prior senior accounting and CFO roles at several technology and digital infrastructure companies, to assume the position of Chief Accounting Officer as of that effective date, signaling a continuity-focused succession plan in a critical financial oversight role for the company and its stakeholders.

The most recent analyst rating on (LITE) stock is a Hold with a $343.00 price target. To see the full list of analyst forecasts on Lumentum Holdings stock, see the LITE Stock Forecast page.

Lumentum Establishes New $400 Million Revolving Credit Facility

On December 19, 2025, Lumentum Holdings Inc. entered into a new senior secured revolving credit facility of up to $400 million, including a $23 million letter of credit sublimit, with Wells Fargo Bank as administrative and collateral agent, to support working capital and general corporate needs. The facility, which matures on December 19, 2030 and was undrawn at inception, allows for incremental revolving commitments and term loans subject to conditions, ties interest margins and commitment fees to the company’s secured net leverage ratio, and imposes customary covenants, financial ratio tests, guarantees by material domestic subsidiaries, and broad asset collateralization, thereby strengthening Lumentum’s liquidity profile while adding leverage and covenant constraints that will shape its balance sheet flexibility and risk profile for lenders and other stakeholders.

The most recent analyst rating on (LITE) stock is a Hold with a $304.00 price target. To see the full list of analyst forecasts on Lumentum Holdings stock, see the LITE Stock Forecast page.