OFC 2026 ignites the frenzy of optical interconnection! AI data centers are increasingly believing in the "power of light." Lumentum (LITE.US) rides the super trend.

"The most core participants of Alphabet Inc. Class C TPU AI computing power chain and also an indispensable core optical/optical module component supplier for NVIDIA Corporation AI GPU chain" Lumentum (LITE.US) saw its stock price soar over 13% during Wednesday's US stock trading session, ultimately closing up 7.89% to break through the $700 mark to $700.810. Prior to this, the leading company in the optical communication industry revealed its long-term financial fundamentals growth model at the OFC 2026 Global Optical Communication Conference, including a $2 billion "quarterly revenue run rate." In terms of Lumentum's stock price bullish prospects, more and more Wall Street Financial Institutions, Inc. have been bullish on the strong continuation of the company's stock price trajectory that soared in 2025. Lumentum's full-year stock price in 2025 soared as much as 340% - undoubtedly a "super bullish stock" in the global stock market, and its stock price has skyrocketed by a staggering 90% so far this year. The above-mentioned $2 billion "quarterly revenue run rate" specifically refers to the company's business operation pace, which has reached or is targeting a strong expansion level of "approximately $2 billion in revenue per quarter," corresponding to an annualized revenue expectation of approximately $8 billion, both quarterly and annual outlooks are much stronger than current performance. For the quarter ended December 27, 2025, the company's revenue reached $665.5 million, a year-on-year increase of 65.5%, hitting the high end of the guidance range. For the next fiscal quarter, Lumentum's management has provided guidance far exceeding market expectations, with the company expected to achieve revenue of $7.8-8.3 billion, which means an expected increase of over 85% year-on-year and a sequential increase of about 22%, demonstrating strong growth momentum. In the next 9 to 12 months (expected to correspond to the second quarter of the 2027 fiscal year or the third quarter of the 2027 fiscal year), the company expects to achieve a quarterly revenue run rate of $1.25 billion (annualized approximately $5 billion), corresponding to a non-GAAP gross margin median of 46.5% and a non-GAAP operating profit margin median of 35%. Following this, in another 9 to 12 months (earliest expected for the first quarter of the 2028 fiscal year, latest for the third quarter of the 2028 fiscal year), Lumentum's management expects to achieve a quarterly revenue run rate of $2 billion (annualized approximately $8 billion), corresponding to a non-GAAP gross margin median of 50.5% and a non-GAAP operating profit margin median of 40%. Lumentum is eating up the AI infrastructure dividend! Regardless of whether NVIDIA Corporation GPU or Alphabet Inc. Class C TPU technology is dominant, it can continue the bullish trajectory After Lumentum announced its financial performance, Morgan Stanley, a Wall Street financial giant, expressed excitement about the company's growth cycle, especially its significant progress in the emerging CPO market. Based on strong fundamentals expectations, Morgan Stanley significantly raised its future profit forecasts for Lumentum. Morgan Stanley analysts expect Lumentum's profit compound annual growth rate (CAGR) to reach an astonishing 158% from the 2025 fiscal year to the 2027 fiscal year. Lumentum is the manufacturer of key components in the optical communication industry (laser, optical component supplier), it also ships some optical module products and subsystems, but its core technological advantage lies in being able to independently build the most basic light sources and high-speed optical device platforms, these components are widely integrated into various optical modules and optical communication systems in large AI data centers. Lumentum is not like Broadcom Inc., which is centered on switch ASIC/DSP platforms, or Coherent, which puts silicon photonics, VCSEL, and InP-on-silicon stacks at the forefront as a "broad-spectrum optical company"; Lumentum is truly strong and attracts Wall Street funding, focusing on InP lasers, EML, ultra-high power lasers (UHP), external lasers, and OCS, which are the most difficult to scale, produce with high yield, and are prone to technical bottlenecks in AI optical interconnection. Lumentum expects EML capacity to increase by over 50% by the end of the 2026 fiscal year, after the company has advanced about 40% of its InP expansion plan, and predicts that by 2030, demand for InP in AI data centers will grow at a compound annual growth rate of 85%. Lumentum expects its OCS shipments to grow at a compound annual growth rate (CAGR) of over 150% between 2025 and 2028, with the goal of achieving annual revenue of over $1 billion in 2027. Lumentum emphasized four key growth drivers at the OFC conference, including high-performance cloud transceivers, optical path switching, scale-out CPO, and scale-up CPO applications. The optical communication network company also discussed capital allocation plans for the $2 billion investment by NVIDIA Corporation in the company. A team led by senior analyst Ruben Roy from Stifel stated in an investor report on Wednesday that with the announcement of the $2 billion long-term quarterly revenue run rate at the OFC conference, the company's stock price outlook will be more optimistic than ever. The analysts in the report mentioned, "Approximately half of the capital plan is allocated to strategic capital expenditures to expand capacity, including the acquisition of the Greensboro wafer factory from Qorvo. They also stated, "Capital expenditures in the coming years will significantly increase to support expansion; the Greensboro factory is expected to be officially certified in the 2027 calendar year and begin production in early 2028. Ultimately, the facility will support $5 billion in revenue expansion capacity, primarily for the ultra-high power lasers used in CPO core applications for NVIDIA Corporation's AI GPU computing clusters. Initially, Lumentum is expected to produce 6-inch InP-grade wafers at the former Qorvo factory, but may switch to 4-inch if necessary, and a final decision has yet to be made." Stifel maintains its "buy" rating on the stock and has a target price of up to $800 within the next 12 months. On the same day, another Wall Street institution, Rosenblatt, gave a target price of up to $900 for Lumentum following the release of the company's strong long-term performance guidance at OFC 2026. The reason why Lumentum's stock price performance from 2025 to date can be said to be "extremely bullish" is mainly due to the fact that Lumentum can benefit from both the Alphabet Inc. Class C TPU AI power industry chain and the NVIDIA Corporation-led AI GPU power industry chain. In the future, whether it is the NVIDIA Corporation AI GPU computing infrastructure cluster or the Alphabet Inc. Class C TPU cluster (TPU represents the AI ASIC technology route), they cannot do without "the optical and silicon high-speed interconnect capabilities represented by Lumentum." In these AI superclusters like TPU and GPU power chains, there is a common core characteristic: the need for ultra-high bandwidth, ultra-low latency, and ultra-high energy efficiency internal interconnection in data centers. Traditional copper cables or electronic exchange solutions explode in power consumption and heat loss when scaled to thousands or even tens of thousands of chips; optical interconnection technology (mainly including co-packaged optics CPO, silicon photonic switches, optical circuit switches OCS) can use light signals instead of electrical signals, significantly increasing bandwidth density and energy efficiency in large-scale AI training/inference networks, reducing latency and power consumption. This demand for higher optical interconnect capacity is exactly what GPU and TPU clusters have in common. For example, NVIDIA Corporation's SpectrumX/QuantumX silicon photonics network switches clearly integrate laser and photon technologies to improve power efficiency and network capacity, and Lumentum's high-performance lasers and optical components are an indispensable part of these switches. Alphabet Inc. Class C has embedded OCS (optical switches) clusters in the Jupiter/AI data center network architecture on a large scale to support TPU AI systems and large-scale training/inference systems. Lumentum's OCS products such as R300/R64 are specifically designed for "large-scale cloud computing + AI/ML data center networks": using MEMS optical paths to establish optical connections directly between endpoints, bypassing intermediate electrical switches and OEO conversions, focusing on high port counts, low latency, low power consumption. In the future, especially on the side of the NVIDIA Corporation AI GPU power cluster, Lumentum, with its capital, capacity, and research and development linkage, especially in core optical interconnection links such as UHP laser/ELS/CPO/OCS, is highly likely to become a primary beneficiary. Lumentum is highly likely to be a "key arms dealer" in the future AI optical interconnect wave, especially for the NVIDIA Corporation GPU chain. OFC 2026 - Increasing confidence in "the power of light" From the perspective of AI data center technology, whether it is the deep exploration of the CPO optical era (where photon elements are co-packaged near the switch/ASIC to reduce latency and power consumption) that NVIDIA Corporation InfiniBand and Alphabet Inc. Class C are both exploring, or the OCS optical system (using optical switching to replace electronic forwarding to reduce energy consumption and latency), a large number of high-performance light sources, lasers, optical switches, and high-density optical interconnection modules are needed to generate, transmit, and switch light signals. Lumentum has deep technical expertise in these optoelectronic components (including efficient lasers and exclusive optical modules that support OCS/CPO), making it a basic supplier for multiple high-performance optical layers in AI networks. Looking at the overall development direction of optical interconnection in data centers at OFC 2026, the industry trend is very clear: the bottleneck of ultra-large-scale AI data centers is shifting from single-chip computing power to "cluster-level interconnect bandwidth, energy consumption, and scalability." Official data shows that this edition of OFC is expected to attract a record 16,000 attendees, over 700 exhibitors, with core displays focused on silicon photonics, lasers, optical modules, CPO, optical switching, and more. The latest product releases from the three optical giants Broadcom Inc., Coherent, and Lumentum also align closely on one thing: 1.6T has shifted from "research topic" to the eve of mass production, with 400G/lane becoming the new physical layer foundation for 3.2T, 12.8T, and even larger-scale AI clusters. The most typical representative technology of "optical power" - namely CPO and OCS - is increasingly transitioning from optional to necessary options for large-scale AI fabric - a high-performance network architecture optimized for artificial intelligence data centers. If we unpack the technological routes of the three giants: Lumentum is more like a crucial device and system supplier for "high-power lasers + EML + OCS + CPO external lasers (ELS)," showcasing a 1.6T DR4 OSFP at OFC 2026 and directly pointing the future path to 3.2T; its management materials also indicate that 1.6T is expected to start mass production and shipment this summer, OCS's run rate could exceed $1 billion in 2027, scale-out CPO could climb to hundreds of millions in 2027, scale-up CPO's first shipments are expected at the end of 2027, and the new Greensboro factory is slated to ramp up in early 2028, corresponding to a route with annual revenue capacity reaching $5 billion in the 2028 calendar year. Coherent, on the other hand, directly showcases a "multi-technology path" route with silicon photonics + VCSEL + InP-on-silicon at OFC, including socketed CPO at 6.4T (32200G), silicon-based 400G/lane links, and a new form of XPO for 12.8T and above. The role of Broadcom Inc., a leader in high-performance Ethernet switch chips for AI data centers and AI ASICs, in the field of optical technology routes is more focused on "switch chip/DSP/PHY/ecosystem standard setter." Its key points at OFC include 102.4T Ethernet switch with CPO (i.e., a 102.4T CPO Ethernet switch), Taurus 400G/lane optical DSP, Tomahawk 6, Tomahawk 6-Davisson CPO, 200G/lane retimer/AEC, OCI MSA, with the goal of leading the global optical communication industry towards 204.8T switching and its so-called 200T AI new era.