Lumentum Holdings (NASDAQ: LITE) stock is eyeing fresh record highs, jumping 5.5% to $944 in pre-market trading on Friday, April 10, as the company points to a massive order backlog over the next couple of years.
The rally coincides with some bullish Wall Street revisions. Notably, JP Morgan boosted its price target on the company from $565 to $950 on Thursday, April 9, reiterating an “Overweight” rating on stronger-than-expected visibility in the most important growth drivers.
A day earlier, Mizuho Securities reaffirmed its “Buy” stance and increased the price forecast from $750 to $930, citing optimism about the company’s trajectory in the latter half of the year.
AI demand drives Lumentum
Discussing the company’s roadmap, CEO Michael Hurlston himself noted that the demand from U.S. hyperscalers is accelerating rapidly and could keep the company sold out through 2028.
“The capex numbers from the U.S. hyperscalers are enormous, and there seems to be no end in sight. We’re falling further and further behind the demand. We would be sold out through all of 2028 within two quarters,” Hurlston said in an interview with Bloomberg.
Lumentum manufactures lasers, optical components, and related software that underpin artificial intelligence (AI) data centers, telecom networks, and cloud infrastructure.
Unsurprisingly, the AI boom has fueled explosive growth, with sales rising more than 50% in each of the past three quarters and the stock going up more than 1,500% over the past year.
To meet surging demand, Lumentum is also repurposing older electronics fabrication facilities, enabling faster rollout of new production capacity.
Nvidia boosts Lumentum
Momentum has also been reinforced by Nvidia (NASDAQ: NVDA), which announced a $2 billion investment in Lumentum last month, coupled with multibillion-dollar purchase commitments and expansion support.
Nvidia is expected to receive Lumentum’s high-power lasers in the second half of 2027, with the agreement remaining in place at least until 2029.
Considering Nvidia’s leading position in the industry, the deal is likely to bolster Lumentum’s bull case further once put into motion.
On its own part, Lumentum is now ramping up investments in Japan, having already committed $100 million. According to Hurlston’s interview, the figure could grow to roughly $250 million in the future.
Featured image via Shutterstock
