Lumentum (LITE) Shows Strong Momentum: Is It a Good Investment?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 27 2025
0mins
Should l Buy LITE?
Source: NASDAQ.COM
Momentum Investing Overview: Momentum investing involves buying stocks that are trending upwards, with the expectation of selling them at even higher prices. It relies on the belief that once a stock establishes a trend, it is likely to continue in that direction.
Lumentum's Performance: Lumentum (LITE) has a Momentum Style Score of A and a Zacks Rank of #1 (Strong Buy). The company has shown significant price increases, with shares up 60.49% over the past quarter and 116.81% over the last year, outperforming the S&P 500.
Earnings Estimates and Volume: Recent earnings estimates for LITE have improved, with seven upward revisions in the past two months, raising the consensus estimate from $4.05 to $4.88. Additionally, LITE has an average trading volume of 3,191,630 shares over the last 20 days, indicating strong market interest.
Investment Recommendation: Given its strong performance metrics and positive earnings revisions, Lumentum is recommended as a promising momentum stock for investors looking for potential short-term gains.
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Analyst Views on LITE
Wall Street analysts forecast LITE stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for LITE is 303.36 USD with a low forecast of 147.00 USD and a high forecast of 470.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
9 Buy
5 Hold
0 Sell
Moderate Buy
Current: 551.990
Low
147.00
Averages
303.36
High
470.00
Current: 551.990
Low
147.00
Averages
303.36
High
470.00
About LITE
Lumentum Holdings Inc. is a designer and manufacturer of optical and photonic products enabling optical networking and laser applications worldwide. Its segments include Cloud & Networking and Industrial Tech. The Cloud & Networking segment products include a comprehensive portfolio of optical and photonic components, modules, and subsystems supplied to cloud and communications network operators and network equipment manufacturers building cloud data center infrastructure, including products for artificial intelligence and machine learning (AI/ML) and data center interconnect (DCI) applications, and communications service provider networks, including products for access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) network infrastructure. The Industrial Tech segment products include solid-state lasers, kilowatt-class fiber lasers, diode lasers, ultrafast lasers, and gas lasers, which address applications in numerous end-markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lumentum's Quarterly Earnings Surge Drives Stock Growth
- Revenue Surge: Lumentum's revenue for the second quarter of fiscal 2026 jumped 65.5% year-over-year to $665.5 million, reflecting strong demand for its optical and photonic technologies, particularly in artificial intelligence and cloud computing systems.
- Improved Profitability: The company's adjusted operating margin expanded by 17 percentage points to 25.2%, indicating significant improvements in profitability as operations scale, which further boosts investor confidence.
- Net Income Explosion: Lumentum's adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, well above Wall Street's estimate of $1.41, showcasing the company's competitive edge and profit potential in the market.
- Optimistic Future Outlook: The company expects revenue for the third quarter of fiscal 2026 to grow approximately 85% to between $780 million and $830 million, with projected adjusted operating margins of 30% to 31%, indicating a solid growth trajectory and strengthened market position for Lumentum going forward.
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Hallador and Transocean Options Trading Active
- Hallador Options Volume: Hallador Energy Co (HNRG) has seen an options volume of 3,388 contracts today, representing approximately 338,800 underlying shares, which is 55.5% of its average daily trading volume of 610,135 shares over the past month, indicating a significant increase in market interest.
- High Volume Contracts: Notably, the $19 strike call option expiring on May 15, 2026, has recorded 1,207 contracts traded today, equating to about 120,700 underlying shares, suggesting heightened investor expectations for future price increases.
- Transocean Options Volume: Transocean Ltd (RIG) has reported an options volume of 200,046 contracts today, representing approximately 20 million underlying shares, which is 54.7% of its average daily trading volume of 36.6 million shares over the past month, reflecting strong market activity.
- High Volume Contracts: The $7 strike call option expiring on January 15, 2027, has seen 33,333 contracts traded today, representing about 3.3 million underlying shares, indicating optimistic sentiment among investors regarding the stock's future performance.
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Lumentum to Benefit as Nvidia Accelerates Optical Technology
- Rising Market Demand: GF Securities analyst Jeff Pu noted that Nvidia's launch of the Quantum-X optical switch at the 2025 GTC will drive demand for continuous-wave lasers from Lumentum, presenting significant market opportunities for the company.
- Product Release Timeline: Nvidia plans to gradually introduce its scale-out optical switches from 2025 to 2027, with a new generation featuring 115.2T expected in 2026, further propelling Lumentum's business growth.
- Long-Term Structural Opportunity: Lumentum highlighted in its recent earnings call that optical scale-up represents a long-term structural opportunity, expected to materialize by late 2027, indicating the company's confidence in future market prospects.
- Technological Transition Trend: As Nvidia considers introducing CPO/NPO technologies in the second half of 2027, Lumentum stands to benefit from the transition in optical interconnects, although the readiness for NPO versus CPO production remains uncertain.
See More
Lumentum Shares Surge Over 40% Following Strong Earnings Report
- Significant Revenue Growth: Lumentum's revenue surged 65.5% year-over-year to $665.5 million in its fiscal Q2 2026, demonstrating strong demand for its optical and photonic technologies, particularly in AI and cloud computing systems.
- Improved Profitability: The adjusted operating margin expanded by 17 percentage points to 25.2%, while adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, significantly exceeding Wall Street's estimate of $1.41, reflecting effective cost control and operational scaling.
- Optimistic Future Outlook: For fiscal Q3 2026, Lumentum expects revenue to grow approximately 85%, projecting between $780 million and $830 million, with adjusted operating margins of 30% to 31% and earnings per share between $2.15 and $2.35, indicating strong confidence in future growth.
- Critical Role in AI Market: CEO Michael Hurlston stated that Lumentum's technology is recognized as a foundational engine of the AI revolution, with virtually every AI network powered by its technology, underscoring the company's strategic importance among global AI leaders.
See More
Top Performing Large-Cap Stocks Last Week
- Lumentum Earnings Beat: Lumentum Holdings Inc. surged 36.02% this week after reporting second-quarter results that exceeded expectations and providing third-quarter guidance above analyst estimates, thereby boosting investor confidence and significantly driving up the stock price.
- Transportation Stocks Rally: Saia, Inc. jumped 23.07% this week, benefiting from declining oil prices, which led to a strong performance across the transportation sector, indicating optimistic market expectations for transportation demand that could enhance future earnings.
- Westlake Stock Increase: Westlake Corporation saw a 19.27% rise in its stock price this week, reflecting positive market sentiment regarding its business outlook, particularly in the context of declining raw material costs that may improve profitability.
- Market Recovery: The strong performance of these stocks indicates a growing investor confidence in economic recovery, especially amid falling oil prices, which could further drive growth in related industries.
See More
Coherent Corp Reports Strong Quarterly Results Amid Analyst Upgrades
- Revenue Growth: Coherent Corp reported quarterly revenue of $1.69 billion, an 18% year-over-year increase and a 7% sequential rise, surpassing the market expectation of $1.64 billion, indicating strong market performance.
- Profitability Improvement: The non-GAAP earnings per share came in at $1.29, exceeding the consensus estimate of $1.21, demonstrating significant progress in cost control and operational efficiency.
- Analyst Rating Upgrades: Analyst Mike Genovese from Rosenblatt Securities raised the price target from $220 to $300, while Needham maintained a Buy rating with a $235 target, reflecting market confidence in the company's future growth.
- Capacity Expansion Plan: The company plans to increase its internal indium phosphide (InP) capacity by 100% by 2026, which will help enhance revenue and margins over the next several quarters to meet the rapid growth demands in AI and cloud computing.
See More
Lumentum's Quarterly Earnings Surge Drives Stock Growth
- Revenue Surge: Lumentum's revenue for the second quarter of fiscal 2026 jumped 65.5% year-over-year to $665.5 million, reflecting strong demand for its optical and photonic technologies, particularly in artificial intelligence and cloud computing systems.
- Improved Profitability: The company's adjusted operating margin expanded by 17 percentage points to 25.2%, indicating significant improvements in profitability as operations scale, which further boosts investor confidence.
- Net Income Explosion: Lumentum's adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, well above Wall Street's estimate of $1.41, showcasing the company's competitive edge and profit potential in the market.
- Optimistic Future Outlook: The company expects revenue for the third quarter of fiscal 2026 to grow approximately 85% to between $780 million and $830 million, with projected adjusted operating margins of 30% to 31%, indicating a solid growth trajectory and strengthened market position for Lumentum going forward.
See More
Hallador and Transocean Options Trading Active
- Hallador Options Volume: Hallador Energy Co (HNRG) has seen an options volume of 3,388 contracts today, representing approximately 338,800 underlying shares, which is 55.5% of its average daily trading volume of 610,135 shares over the past month, indicating a significant increase in market interest.
- High Volume Contracts: Notably, the $19 strike call option expiring on May 15, 2026, has recorded 1,207 contracts traded today, equating to about 120,700 underlying shares, suggesting heightened investor expectations for future price increases.
- Transocean Options Volume: Transocean Ltd (RIG) has reported an options volume of 200,046 contracts today, representing approximately 20 million underlying shares, which is 54.7% of its average daily trading volume of 36.6 million shares over the past month, reflecting strong market activity.
- High Volume Contracts: The $7 strike call option expiring on January 15, 2027, has seen 33,333 contracts traded today, representing about 3.3 million underlying shares, indicating optimistic sentiment among investors regarding the stock's future performance.
See More
Lumentum to Benefit as Nvidia Accelerates Optical Technology
- Rising Market Demand: GF Securities analyst Jeff Pu noted that Nvidia's launch of the Quantum-X optical switch at the 2025 GTC will drive demand for continuous-wave lasers from Lumentum, presenting significant market opportunities for the company.
- Product Release Timeline: Nvidia plans to gradually introduce its scale-out optical switches from 2025 to 2027, with a new generation featuring 115.2T expected in 2026, further propelling Lumentum's business growth.
- Long-Term Structural Opportunity: Lumentum highlighted in its recent earnings call that optical scale-up represents a long-term structural opportunity, expected to materialize by late 2027, indicating the company's confidence in future market prospects.
- Technological Transition Trend: As Nvidia considers introducing CPO/NPO technologies in the second half of 2027, Lumentum stands to benefit from the transition in optical interconnects, although the readiness for NPO versus CPO production remains uncertain.
See More
Lumentum Shares Surge Over 40% Following Strong Earnings Report
- Significant Revenue Growth: Lumentum's revenue surged 65.5% year-over-year to $665.5 million in its fiscal Q2 2026, demonstrating strong demand for its optical and photonic technologies, particularly in AI and cloud computing systems.
- Improved Profitability: The adjusted operating margin expanded by 17 percentage points to 25.2%, while adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, significantly exceeding Wall Street's estimate of $1.41, reflecting effective cost control and operational scaling.
- Optimistic Future Outlook: For fiscal Q3 2026, Lumentum expects revenue to grow approximately 85%, projecting between $780 million and $830 million, with adjusted operating margins of 30% to 31% and earnings per share between $2.15 and $2.35, indicating strong confidence in future growth.
- Critical Role in AI Market: CEO Michael Hurlston stated that Lumentum's technology is recognized as a foundational engine of the AI revolution, with virtually every AI network powered by its technology, underscoring the company's strategic importance among global AI leaders.
See More
Top Performing Large-Cap Stocks Last Week
- Lumentum Earnings Beat: Lumentum Holdings Inc. surged 36.02% this week after reporting second-quarter results that exceeded expectations and providing third-quarter guidance above analyst estimates, thereby boosting investor confidence and significantly driving up the stock price.
- Transportation Stocks Rally: Saia, Inc. jumped 23.07% this week, benefiting from declining oil prices, which led to a strong performance across the transportation sector, indicating optimistic market expectations for transportation demand that could enhance future earnings.
- Westlake Stock Increase: Westlake Corporation saw a 19.27% rise in its stock price this week, reflecting positive market sentiment regarding its business outlook, particularly in the context of declining raw material costs that may improve profitability.
- Market Recovery: The strong performance of these stocks indicates a growing investor confidence in economic recovery, especially amid falling oil prices, which could further drive growth in related industries.
See More
Coherent Corp Reports Strong Quarterly Results Amid Analyst Upgrades
- Revenue Growth: Coherent Corp reported quarterly revenue of $1.69 billion, an 18% year-over-year increase and a 7% sequential rise, surpassing the market expectation of $1.64 billion, indicating strong market performance.
- Profitability Improvement: The non-GAAP earnings per share came in at $1.29, exceeding the consensus estimate of $1.21, demonstrating significant progress in cost control and operational efficiency.
- Analyst Rating Upgrades: Analyst Mike Genovese from Rosenblatt Securities raised the price target from $220 to $300, while Needham maintained a Buy rating with a $235 target, reflecting market confidence in the company's future growth.
- Capacity Expansion Plan: The company plans to increase its internal indium phosphide (InP) capacity by 100% by 2026, which will help enhance revenue and margins over the next several quarters to meet the rapid growth demands in AI and cloud computing.
See More
