Lumentum Holdings (LITE) AI Stock Analysis

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Lumentum Holdings

(NASDAQ:LITE)

Select Model

Neutral 59 (OpenAI - 5.2)

Rating:59Neutral

Price Target:

$664.00

▼(-0.56% Downside)

The score reflects strong technical momentum and a highly constructive earnings outlook (record guidance and margin expansion), offset by elevated financial risk from high leverage, uneven cash-flow quality, and a stretched valuation (very high P/E with no dividend support).

Positive Factors

Record revenue guidance and strong demand

Management's guidance to a new quarterly revenue record reflects durable end-market demand, especially from cloud/AI customers. An 85%+ YoY uplift implies multi-quarter revenue momentum and larger addressable share, supporting sustained top-line expansion if execution and capacity keep pace.

Material margin expansion and improving profitability

Meaningful margin expansion demonstrates operating leverage from higher volumes and better product mix (components and systems). If Lumentum sustains these gross and operating margins through scale, profitability quality and cash generation should structurally improve across cycles.

Large OCS backlog and transceiver leadership

A sizable OCS backlog plus leadership in 1.6T cloud transceivers provide durable product-level growth drivers and pricing leverage. These technology positions deepen customer relationships and create multi-year revenue visibility as hyperscalers and cloud networks upgrade capacity.

Negative Factors

High leverage and balance-sheet constraints

A substantially elevated debt-to-equity ratio reduces financial flexibility, raises interest and covenant sensitivity, and limits the company's ability to invest or absorb demand shocks. High leverage increases refinancing and liquidity risk if growth or margins falter.

Persistent capacity constraints and supply shortfall

A 25–30% supply shortfall signals structural production bottlenecks. Continued under-supply can delay revenue recognition, force premium allocation to select customers, and require capex and contract-manufacturer reliance, raising execution complexity and risk to sustained growth.

Customer concentration and revenue phasing risks

Heavy reliance on a small set of large customers increases negotiation and allocation exposure. Backloaded orders, program timing slips and uneven LTA adoption can create revenue volatility and margin pressure if a major customer shifts procurement or delays acceptance.

Lumentum Holdings (LITE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$42.43B

Dividend YieldN/A

Average Volume (3M)4.84M

Price to Earnings (P/E)194.4

Beta (1Y)2.51

Revenue Growth33.62%

EPS GrowthN/A

CountryUS

Employees7,257

SectorTechnology

Sector Strength88

IndustryCommunication Equipment

Share Statistics

EPS (TTM)1.67

Shares Outstanding71,400,000

10 Day Avg. Volume4,384,333

30 Day Avg. Volume4,838,152

Financial Highlights & Ratios

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 Cap1.19

Enterprise Value/Revenue23.92

Enterprise Value/Gross Profit71.54

Enterprise Value/Ebitda156.32

Forecast

1Y Price Target

$543.29

Price Target Upside-18.64% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering14

EPS Forecast (FY)7.58

Revenue Forecast (FY)$2.88B

Lumentum Holdings Business Overview & Revenue Model

Company DescriptionLumentum 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 MoneyLumentum 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 Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
How sales split across Lumentum’s product lines and end markets, showing which businesses drive growth, profit margins, and sensitivity to demand cycles. Segment mix reveals whether the company depends more on telecom and data‑center optics, which can be cyclical, or on commercial lasers and sensing, which may offer different growth and margin profiles — changes in the mix can signal margin pressure or faster expansion opportunities.

Chart InsightsAfter a multi-quarter trough in 2023, both Components and Systems have reaccelerated through 2024–25, with Systems growing faster and taking a larger share as AI/cloud transceiver demand ramps. Management confirms AI now drives the majority of revenue and is adding wafer fab capacity to sustain growth, which supports upside but also highlights a supply-driven constraint—EML demand currently outpaces supply—while weaker industrial lasers remain a drag. In short, structural AI-led demand should drive continued revenue expansion if capacity ramps keep pace with constrained supply.

Data provided by:

The Fly

Lumentum Holdings Earnings Call Summary

Earnings Call Date:Feb 03, 2026

(Q2-2026)

% Change Since: |

Next Earnings Date:May 12, 2026

Earnings Call Sentiment Positive

The call was strongly positive on execution and demand: record revenue, very large year-over-year growth, substantial margin expansion, a sizable OCS backlog (> $400M), accelerating transceiver momentum (1.6T), and visible progress on indium phosphide capacity all point to durable growth driven by cloud/AI adoption. Lumentum also disclosed several operational and timing challenges — notably wafer and factory capacity constraints, a 25%–30% supply shortfall, reliance on a few large customers, some program timing pushes, and the need to expand contract manufacturing — which introduce execution risk. On balance, the highlights (record financials, large multi‑year addressable markets, strong backlog and margin leverage) meaningfully outweigh the lowlights, though supply and execution remain the principal risks to sustaining the trajectory.

Q2-2026 Updates

Positive Updates

Record Quarterly Revenue and Strong Guidance

Q2 revenue of $665.5M set a company record and represented over 65% year-over-year growth. Management raised confidence in the near-term outlook and issued Q3 non-GAAP revenue guidance of $780M–$830M (midpoint $805M), implying an ~85%+ year-over-year increase at the midpoint and another new quarterly revenue record.

Material Margin Expansion and Profitability

Second quarter non-GAAP operating margin expanded to 25.2%, up ~1,730 basis points year-over-year and up 650 basis points sequentially. Non-GAAP gross margin was 42.5%, up 820 basis points year-over-year and up 310 basis points sequentially. Non-GAAP operating profit was $167.7M and adjusted EBITDA was $198.3M; non-GAAP EPS was $1.67 (GAAP EPS $0.89).

Components and Systems Revenue Upside

Components revenue reached $443.7M (up 17% sequentially and 68% year-over-year). Systems revenue was $221.8M (up 43% sequentially and 60% year-over-year). Components drove roughly two-thirds of the sequential increase expected in Q3, with systems contributing the remainder.

Optical Circuit Switches (OCS) Outperformance

OCS exceeded internal expectations: the company achieved its first $10M quarter three months early and now reports an order backlog well in excess of $400M, with the majority targeted for shipment in the second half of the calendar year, indicating significant ramp potential into 2027.

Cloud Transceiver Momentum and 1.6T Leadership

Cloud transceivers were a clear growth driver: transceiver revenue grew significantly in Q2 (approximately +$50M contribution in systems), the company reports improved time-to-market, better yields and lower scrap, and management states they are in the 'lead pack' for customers transitioning to 1.6T speeds.

CPO and External Light Source (ELS) Opportunities

Secured an additional multi‑hundred‑million dollar purchase order for ultra‑high‑power (UHP) lasers (shipments expected in 2027). Management highlighted a potential move into pluggable external light source modules (ELS), which could materially enlarge addressable market and increase ASPs relative to standalone laser chips.

Indium Phosphide Fab Expansion Progress and Capacity Line of Sight

Front‑loaded more than half of a planned 40% indium phosphide wafer capacity expansion this quarter. Management cited line of sight to additional capacity through Sagamihara and improved utilization of Caswell (UK) and Takao (Japan) fabs, plus potential further capacity starting in 2026.

Robust Product-Level Performers

EML laser shipments hit another quarterly company record driven by 100G lanes and ramping 200G devices. Pump laser revenue surged over 90% year-over-year. 200G lane devices represented ~5% of unit volume but supplied ~10% of data center laser chip revenue, with management targeting ~25% 200G mix by year-end (implying ASP uplift).

Solid Cash Position and Investment

Cash and short-term investments rose to $1.16B (up $33M in the quarter). The company invested $84M in CapEx focused on manufacturing capacity to support cloud and AI customers while increasing inventory by $39M to support expected growth.

Negative Updates

Sustained Supply-Demand Imbalance and Capacity Constraints

Management reported a supply-demand gap in indium phosphide/EML production of roughly 25%–30% (undersupplying demand). Several fabs and laser production lines are fully allocated, creating risk in meeting accelerating customer demand and backlog fulfillment.

Factory Capacity and Back‑End Manufacturing Bottlenecks

Beyond wafer fab constraints, back-end factory capacity (assembly/test) is strained. Management is increasing reliance on contract manufacturers and reconfiguring facilities (including Nava/Thailand) to address capacity; this creates execution and supply-chain complexity.

Transceiver Growth Could Be a Margin Headwind

While transceivers accelerated materially and management expects continued growth, they acknowledged transceiver expansion remains a margin headwind despite yield and ASP improvements. Rapid scale beyond prior internal targets could pressure margins if not managed carefully.

Industrial End Market Softness

Industrial shipments were roughly flat sequentially in Q2, reflecting persistent cyclical softness in the broader industrial market, limiting near-term upside from that end market.

Timing Delays and Revenue Phasing Risks

Some product introductions/timelines have slipped (e.g., planned CW laser/transceiver integration pushed ~2–3 months). Material CPO/UHP laser shipments from the new multi‑$100M order are expected in 2027, meaning significant revenue from that order will be back‑loaded.

Customer Concentration and LTA Negotiations

A meaningful portion of demand is concentrated among a few large hyperscaler customers; while many volumes are locked via LTAs through calendar 2027, some telecom customers are reluctant to sign LTAs and face allocation/price negotiation challenges, which complicates allocation and pricing dynamics.

Forward-Looking Risks and Dependence on No Disruption

Q3 and beyond guidance assume no unforeseen manufacturing or supply-chain disruptions. Management flagged capital requirements and active negotiations with customers to offset capital in exchange for long‑term supply assurances, indicating exposure to execution and financing risks.

Company Guidance

Lumentum guided Q3 FY2026 non‑GAAP revenue of $780–$830 million (midpoint $805M), which would be a new quarterly record and implies an ~85%+ year‑over‑year increase, with non‑GAAP operating margin of 30–31% and diluted non‑GAAP EPS of $2.15–$2.35 (using a 16.5% non‑GAAP tax rate and ~92 million diluted shares); management expects roughly two‑thirds of the sequential revenue gain to come from components and one‑third from systems (transceiver and OCS ramps). For context, Q2 was $665.5M revenue with non‑GAAP gross margin 42.5%, non‑GAAP operating margin 25.2%, non‑GAAP EPS $1.67, non‑GAAP operating profit $167.7M and adjusted EBITDA $198.3M.

Lumentum Holdings Financial Statement Overview

Summary

Income trends are rebounding (TTM revenue +14.3% and net margin ~12%), but the balance sheet is a key risk with very high leverage (TTM debt-to-equity ~3.9x). Cash flow has improved to positive TTM FCF ($130M) yet remains volatile with weak cash conversion versus earnings.

Income Statement

Neutral

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

Neutral

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

Neutral

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 Price667.77

Price Trends

50DMA

414.48

Positive

100DMA

317.07

Positive

200DMA

212.04

Positive

Market Momentum

MACD

70.74

Negative

RSI

79.92

Negative

STOCH

93.57

Negative

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 667.77 is above the 20-day moving average (MA) of 496.89, above the 50-day MA of 414.48, and above the 200-day MA of 212.04, indicating a bullish trend. The MACD of 70.74 indicates Negative momentum. The RSI at 79.92 is Negative, neither overbought nor oversold. The STOCH value of 93.57 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LITE.

Lumentum Holdings Risk Analysis

Lumentum Holdings disclosed 45 risk factors in its most recent earnings report. Lumentum Holdings reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

Although we expect that our acquisitions will result in cost savings, synergies, and other benefits, we may not realize those benefits, or be able to retain those benefits even if realized. Q1, 2023

We may be adversely affected by climate change regulations. Q1, 2023

Our financial results may be adversely affected due to changes in product demand impacted by recessions, inflation, stagflation and other economic conditions. Q1, 2023

Lumentum Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIEN	71 Outperform	$43.99B	374.86	4.45%	―	18.79%	49.53%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
VIAV	60 Neutral	$6.09B	-138.80	-5.54%	―	15.60%	―
LITE	59 Neutral	$42.43B	194.36	29.27%	―	33.62%	―
EXTR	54 Neutral	$1.90B	210.18	12.43%	―	14.31%	―
PI	50 Neutral	$3.72B	―	-6.04%	―	4.24%	-141.83%

* Technology Sector Average

Performance Comparison

LITE

Lumentum Holdings

667.77

595.30

821.44%

CIEN

Ciena

334.95

254.52

316.45%

EXTR

Extreme Networks

14.05

-1.07

-7.08%

VIAV

Viavi Solutions

27.53

16.18

142.56%

IMPINJ

127.92

33.30

35.19%

Lumentum Holdings Corporate Events

Executive/Board Changes

Lumentum Announces Chief Accounting Officer Succession Plan

Neutral

Jan 5, 2026

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.

Business Operations and StrategyPrivate Placements and Financing

Lumentum Establishes New $400 Million Revolving Credit Facility

Positive

Dec 22, 2025

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.

Executive/Board ChangesShareholder Meetings

Lumentum Holdings Concludes 2025 Annual Meeting

Neutral

Nov 24, 2025

On November 19, 2025, Lumentum Holdings held its 2025 Annual Meeting, with 87.24% of outstanding shares represented. Key decisions included the election of directors, approval of executive compensation on a non-binding basis, approval of the 2025 Equity Incentive Plan, and ratification of Deloitte & Touche LLP as the independent auditor for the fiscal year ending June 27, 2026.

The most recent analyst rating on (LITE) stock is a Buy with a $290.00 price target. To see the full list of analyst forecasts on Lumentum Holdings stock, see the LITE Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 21, 2026