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Original headline: Why Lumentum’s stock led the S&P 500 higher on Monday
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SPY
▲ Likely positiveSPDR S&P 500 ETF
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/26/2026 | 765.22 |
| Change that session | +0.69% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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- Why Ciena, Lumentum and other optical stocks were among the market’s biggest losers on Monday
- Why Lumentum Sank Today
Shares of Lumentum (LITE) fell 9.8% on Monday, after a strong run driven by AI demand for optical lasers. Last week, CEO Michael Hurlston told Bloomberg the company was “almost sold out” for 2029, pushing shares to an all-time high. Over the weekend, Broadcom CEO Hock Tan told a Singapore conference that many investors are treating AI like a “casino” with extreme expectations, and questioned whether leading AI companies such as OpenAI will have sustainable, profitable business models. He said enterprise use of AI tokens is mostly experimental and not economical in the long run, and his comments triggered a broad pullback in AI infrastructure stocks. The article argues the bull case for optical stocks remains intact as long as end users keep getting value from the technology and sustainable AI business models develop.
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- Lumentum Jumps 8% as StoneX Starts Coverage With $1,200 Target; Applied Optoelectronics and Coherent Climb 6%
Lumentum shares rose 8% to $819.98 in afternoon trading after StoneX started coverage with a Buy rating and a $1,200 price target. Applied Optoelectronics and Coherent each climbed 6%, while the Roundhill Photonics & Optics ETF (LYTE) rose 4% to $18.96 and the SPDR S&P 500 ETF Trust (SPY) gained 0.7% to $765.32. Optics stocks had slid steeply over the past month amid questions about how customers will fund large AI infrastructure projects, which weighed on the timing of optical component orders. Lumentum makes lasers and optical components for data center and telecom networks, Coherent is spending heavily to expand capacity, and Applied Optoelectronics depends on a small number of large customers. The article says the next test is whether AI customers turn their expansion plans into firm optical orders.
- Optics Stocks Rally Ahead of Earnings: Applied Optoelectronics Jumps 5%, Lumentum Adds 4%, Coherent Rises 2%
Optics stocks rose on Monday in anticipation of early-November earnings, with Applied Optoelectronics (AAOI) up 5% to $79.01, Lumentum (LITE) up 4% to $856.18, Coherent (COHR) up 2% to $236.93, and the Roundhill Photonics & Optics ETF (LYTE) up 2% to $20.20. Lumentum's CEO Michael Hurlston said its components are sold out through 2029 and that the company cannot meet roughly 70% of demand for some products through 2027 and 30% for others through 2028. Coherent launched its PhotonLink integrated optics platform, already has more than 10 customer engagements, and expects initial PhotonLink revenue to ramp in the December quarter; one analyst reiterated a Buy rating with a $395 price target. The article notes valuations remain elevated versus historical averages, and Coherent reports on November 4 while Applied Optoelectronics and Lumentum report on November 5.
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Lumentum, a laser and optical parts maker spun off from JDS Uniphase in 2015, has seen its revenue surge as AI data centers adopt its optical links: fiscal 2026 revenue reached $3.014 billion, up 83.22%, and fourth-quarter revenue hit $1.01 billion, up 109%. A $1,000 investment ten years ago would be worth $22,714.90, versus $3,617.60 for the S&P 500, though most of that gain came in the last 12 months. Management guided fiscal first-quarter revenue to $1.225–$1.275 billion. Shares remain volatile, with a 52-week range of $152.54 to $1,143 and an 18.89% drop over the past week. The fourth quarter also included a $7.2 billion GAAP net loss driven by a $7.8 billion non-cash charge.
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