Lumentum (LITE) rallied 10% intraday today, while U.S. stock index futures hit a record high over the same period.
This company works in optical communications and photonics. Its product lines cover optical transceiver modules and laser components—key suppliers along the AI data center chain. Over the past year, its stock price has risen by about 700%.
What’s worth noting is the path it has taken this year.
Over the past three months, LITE has once lagged its peers by 40%. The reason is that the market has started to worry that co-packaged optics—this new technology—may erode its product demand. Note that what people are worried about is “whether it will happen,” not “whether it already has.”
Actual figures from the same period: revenue grew 90% year over year; cash on hand and short-term investments were $3.17 billion; and operating cash flow for the first nine months was $388 million. The market’s EPS expectation for the next fiscal quarter is up 214% year over year.
In July, Barclays upgraded the rating from Equal Weight to Overweight, with a target price of $1,000. The reason was that market doubts about co-packaged optics outweighed the actual demand for the transceiver modules and lasers; the stock price then rebounded.
A stock that dropped for three months hasn’t changed fundamentally from start to finish—the only thing that’s changed is whether the market is willing to believe.
Price reflects sentiment, not facts. Sentiment turns before facts do, and it collapses before the facts do.
Next milestone: 8/11 earnings report.
This rally is driven by expectations; the earnings report is what serves as the test.
