According to recent market analysis, optical communications giants Lumentum (LITE) and Coherent (COHR) delivered strong second-quarter results that revealed a critical market signal: the global AI infrastructure boom is driving severe supply-demand imbalances across the optical communications industry chain.

Market research indicates this AI-driven optical communications cycle demonstrates sustainability and growth potential that far exceeds previous market expectations. Structural supply chain shortages are creating unprecedented profit opportunities throughout the entire industry chain.

Upstream chip manufacturers are entering a golden period, with persistent shortages of EML chips and silicon photonics chips enabling chipmakers to command higher gross margins and stronger pricing power. Lumentum expects gross margins to exceed 40% with operating margin targets above 20%.

Furthermore, robust AI infrastructure demand from global hyperscale AI and cloud service providers continues to support sustained growth for Chinese optical transceiver manufacturers.

**Lumentum Delivers Outstanding Performance: Chip Shortages Drive Expansion Wave**

Lumentum presented impressive results for 4QFY25 with revenue of $480.7 million, surging 55.9% year-over-year, while GAAP net income swung from a $252.5 million loss in the prior year to a $213.3 million profit.

More notably, the company's forward guidance shows 1QFY26E revenue expectations of $510-540 million, representing 6%-12% sequential growth and 51%-60% year-over-year growth. Management anticipates quarterly revenue will breach the $600 million threshold by the June 2026 quarter or earlier.

EML chip supply bottlenecks highlight industry opportunities:

• June quarter EML chip shipments reached record highs, with revenue nearly doubling year-over-year • To alleviate chip shortages, Lumentum is transitioning from 3-inch to 4-inch wafers, with potential future upgrades to 6-inch • The company secured substantial orders for 200G EML chips scheduled for December quarter delivery • 2026 is expected to be a breakthrough year for 100G and 200G laser chip shipments

**Coherent Shows Steady Growth: Data Center Business Becomes Growth Engine**

While Coherent's overall performance was more moderate, its data center segment demonstrated strong momentum. 4QFY25 revenue increased 16.4% year-over-year, with non-GAAP earnings of $192 million, up 73.6% year-over-year.

Data center communications business showed standout performance:

• Data center and communications business contributed 62% of total revenue, growing 39% year-over-year to $942 million • 1.6T transceivers began shipping in the June quarter, expected to provide meaningful revenue contribution in FY26 • The company continues developing 3.2T transceiver products utilizing 400G per channel EML chips

However, 1QFY26 revenue guidance of $14.6-16.0 billion (8%-18.6% year-over-year growth) fell short of market expectations, primarily due to industrial business headwinds.