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Lumentum Surges on AI Optics Demand
25 Nov
Summary
- Lumentum Holdings stock jumped 17.13% following a higher price target.
- Needham cited strong demand for AI optical products and capacity constraints.
- Lumentum's Cloud Light products are now shipping to hyperscaler customers.
Lumentum Holdings Inc. saw its stock price climb by 17.13% on Monday, closing at $299.36 per share. This significant gain was propelled by an upgraded price target from Needham, which raised its outlook for Lumentum from $235 to $290 while reaffirming a 'buy' rating. The investment firm emphasized Lumentum's strategic importance as a crucial supplier in the rapidly expanding AI optical market.
Needham's analysis pointed to ongoing capacity constraints in the production of EML chips for the global XCVR market, which are expected to persist through 2025. The firm also noted that industry projections indicate a compound annual growth rate exceeding 30% for the high-speed XCVR market between 2023 and 2028. Lumentum's Cloud Light XCVR products are reportedly now being delivered to all three of its hyperscaler clients.
Looking ahead, Needham anticipates improved financial results for Lumentum, including growth in revenue, profit margins, income, and cash flow. The firm believes these positive developments will support a continued upward trend in the company's stock value. Lumentum plans to integrate its proprietary CW lasers into its offerings, further strengthening its market position in the AI optical segment.
