New York, January 23, 2026, 20:45 (EST) — Market closed
Lumentum Holdings Inc (LITE.O) shares dropped 4.4% on Friday to $339.19, ending a brief rally and leaving the optical components maker behind the wider tech sector heading into the weekend.
The pullback is significant since Lumentum now acts as a high-beta proxy for spending on faster connections within AI data centers. Expectations have surged rapidly, prompting traders to probe just how much positive news the stock has already absorbed.
The tech-heavy Invesco QQQ Trust, tracking the Nasdaq 100, closed Friday roughly 0.3% higher. Lumentum bucked the trend, suggesting the shift reflected positioning moves rather than a widespread tech sell-off.
On Thursday, Stifel bumped up its price target to $400 from $220, maintaining a Buy rating, according to an Investing.com report. The firm highlighted a “step-function increase in networking intensity” driven by AI workloads and singled out “agentic AI and reasoning networks” as key factors accelerating networking upgrade cycles.
Susquehanna’s Christopher Rolland raised his price target sharply to $420 from $230, maintaining a Positive rating. In his earnings-preview note, he anticipates results to come in around expectations with a slight upside, citing a “steadying upcycle” and an expanding AI infrastructure supply chain. He also pointed to improving industrial demand but noted the auto sector remains “somewhat challenged.” 1
On Friday, Citigroup boosted its price target sharply, from $240 to $450, while keeping its Buy rating intact, Benzinga data revealed. This new target suggests an upside of about 18% to 33% from Friday’s closing price. Still, the stock’s decline that day indicated investors aren’t simply accepting these upgrades without question. 2
Lumentum produces lasers and optical components used in telecom, enterprise, and data center networks. It also runs a laser segment focused on precision manufacturing. Investors often compare it with peers like Coherent and Ciena, which operate in the same optical-networking space.
The company took advantage of SPIE Photonics West in San Francisco this week to unveil new ultrafast and UV laser platforms alongside 3D sensing products, it reported. “Manufacturers are being pushed to achieve tighter tolerances,” said Matt Philpott, vice president of business development, in the release. 3
But the setup runs both ways. Those higher targets hinge on AI-driven orders holding steady and margins continuing to improve; any sign of softer demand or a dimmer forecast could hit a stock that’s already rerated sharply.
Lumentum is set to report its fiscal second-quarter 2026 earnings after U.S. markets close on Tuesday, Feb. 3, the company announced. An audio webcast will follow later that day. Investors will focus on updated guidance and any new insights into data-center demand, a segment known for volatile order timing from quarter to quarter. 4
