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Lumentum Holdings: AI Optics Are Surging, but the Stock Is No Longer Overlooked

Writer: Felix Ouma
Felix Ouma
11 hours ago
8 min read

RATING: BUY (downgraded from Strong Buy)  |  TARGET: $1,175  |  PRICE: $1,045.78 as of October 1, 2026  |  PRICE UPSIDE: 12.4%

Summary

  • Fiscal Q4 revenue reached $1.006 Bn, up 109% year over year, while adjusted EPS of $3.23 beat the $2.97 consensus and non-GAAP operating margin expanded to 36.6%.


  • The AI-optics thesis strengthened: both Components and Systems grew more than 100% year over year, initial 1.6T shipments began, and fiscal Q1 guidance moved to $1.225-$1.275 Bn of revenue.


  • Valuation now carries real execution risk. Lumentum trades near 48x forward earnings versus a peer median near 34x, and Q4 non-GAAP diluted shares rose to 101.1 Mn from 72.0 Mn a year earlier.

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LUMENTUM office sign outside a modern glass building, with 1001 visible, landscaped succulents, trees, and bright purple flowers
Source: Seeking Alpha

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