MW Lumentum's new revenue forecast further fuels one of the market's hottest stocks

By Christine Ji

The company is targeting a massive $2 billion quarterly revenue run rate within two years, driven by increasing demand for optical solutions for advanced AI workloads

Lumentum expects the total addressable market for optical interconnects to reach $90 billion by 2030.

Lumentum Holdings new, incredibly bullish long-term financial outlook has helped further fuel the optical stock's recent surge.

The maker of optical components $(LITE)$ said at the Optical Fiber Communication Conference on Tuesday that it sees the total addressable market for optical interconnects growing to $90 billion by 2030, up from around $18 billion today. The sector has become a major beneficiary of the artificial-intelligence boom, as increasingly powerful chips demand faster networking solutions beyond the capabilities of traditional copper solutions.

While there's been some Wall Street debate over whether optical components or copper technologies will lead the next wave of connectivity for major players, Nvidia (NVDA) CEO Jensen Huang signaled earlier this week that both would play a big role in his company's new products.

In the meantime, booming optical demand has created a supply shortage that's supercharging Lumentum's growth. Its shares have rocketed as well, more than doubling over a three-month span and rising nearly 1,000% over a 12-month period. Lumentum is due to join the S&P 500 SPX next week, and only one of the benchmark index's current components has performed better than the company's stock over the past year.

Now, Lumentum says it expects to achieve a $1.25 billion quarterly revenue run rate in the next nine to 12 months, and a $2 billion quarterly revenue run rate within the next 18 to 24 months. For the current quarter, management reaffirmed their previous projection of $805 million in revenue at the midpoint.

Lumentum's stock was up more than 9% in Wednesday's midday action.

The company's optical circuit switches, co-packaged optics solutions and transceivers currently comprise a quarter of its total revenues - but it projects that these three areas will drive 60% of total revenue in two years. Over the same period, the Lumentum is aiming to expand its operating margins by 10 percentage points, to 40%, as it vertically integrates its offerings and shifts its product mix to favor those with higher average selling prices.

While 800G transceivers are the industry standard now, Lumentum will begin shipping its latest 1.6T transceivers in June for more advanced AI workloads.

Read: Nvidia's big GTC event could spark a rally in these 5 stocks

Mizuho analyst Vijay Rakesh noted that Lumentum could see additional upside to its $2 billion target for quarterly revenue run rate. He has an outperform rating and a $750 price target on the stock.

The industry's move to co-packaged optics - where optical transceivers are integrated directly onto the chip substrate to save power - will be an especially big benefit to Lumentum. The company is moving to sell a comprehensive external laser module that serves as a source of light for large clusters of chips. The module is pluggable, meaning that it can be easily switched out without needing to interfere with other hardware.

Lumentum is delivering a "turnkey solution" that will improve "customer traction," Rakesh wrote in a Wednesday note. Nvidia is a major customer, as its new chips will require significantly more laser links than they do today. Earlier this month, Lumentum received a $2 billion investment and multiyear purchase commitments from Nvidia, cementing its critical role in the AI-infrastructure supply chain. Fellow optical supplier Coherent $(COHR)$ scored a similar arrangement.

But Lumentum CEO Michael Hurlston emphasized on Tuesday that the "turnkey package" will help "enable customers beyond our lead customer."

The company is looking to "engage customers that don't have the optical engineering expertise that our primary customers do," Hurlston said. "And this is a real vehicle for us to engage the broader market."

See more: These 6 stocks could be major winners of an upcoming optics 'supercycle'

-Christine Ji

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March 18, 2026 13:01 ET (17:01 GMT)

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