LOS ANGELES, March 18, 2026, 07:43 PDT
Lumentum jumped as much as 14.3% Wednesday, with shares still ahead by 8.1% late in the morning. The optical components maker, speaking at an industry event, laid out a roadmap to $1.25 billion in quarterly revenue—and eventually, $2 billion—as surging AI data-center demand fuels growth.
The action was notable, undoing a chunk of Tuesday’s declines after Nvidia CEO Jensen Huang indicated upcoming systems will incorporate both copper and optical links. Slide decks presented at OFC in Los Angeles—the sector’s big optical-networking event—now point to a new focus: not if optics will be adopted, but how rapidly it can jump from rack-to-rack setups to tighter, shorter-range connections.
Shares of Coherent, which trades as Lumentum’s main listed rival in photonics, climbed 3.4%. The company told investors it sees the datacenter market swelling past $70 billion by 2030. Lumentum, for its part, estimated the broader optical AI segment at over $90 billion and called for industry revenue to jump roughly 40% annually.
Nvidia kicked things off earlier this month, committing $2 billion apiece to Lumentum and Coherent, plus multibillion-dollar purchase agreements and future rights on capacity. That move links both firms more closely to Nvidia’s next-generation AI infrastructure—though CEO Huang has left some space for copper in the mix.
Lumentum, in its March 17 presentation, lined up fiscal 2026 consensus estimates of $2.9 billion in annual revenue against higher scenarios: roughly $5 billion, assuming $1.25 billion per quarter, and as much as $8 billion a year at a $2 billion quarterly run rate. The same slide showed operating margin projections moving up—33% to 37% for the first revenue step, and 38% to 42% at the second. The company flagged this as a target model rather than official guidance.
Lumentum’s portfolio, according to Chief Strategy Officer Rafik Ward at OFC, targets the “scale, speed, and efficiency” AI infrastructure now requires. CTO Matt Sysak, in a separate statement, pointed to pressure on legacy electrical interconnects from ongoing AI buildouts. The company is rolling out new VCSEL-powered and pluggable optics, aiming to cover both short in-rack links and longer rack-to-rack spans. Lumentum Investor Relations
Coherent’s pitch echoes that. The company’s OFC slides highlight that optical circuit switches are already contributing to revenue, while it expects co-packaged or near-packaged optics—bringing those optical links right up against the chips—to start generating sales in the back half of 2026, with multi-rail offerings following in 2027. Beck Mason, who leads semiconductor devices at Coherent, called indium phosphide “central to high-performance optical connectivity.” According to the company, capacity for InP should more than double by the end of 2027. Coherent Inc
Investors are still working out the winners from the laggards. Corning and Applied Optoelectronics dropped after Huang’s comments earlier this week. Credo, tied to copper, fared better—shares slipped only 0.2% on Wednesday. It’s another sign the copper versus optics debate is shifting with each tick.
There’s a hitch. Lumentum’s current excitement rests on modeled projections, not locked-in orders, and management made it clear that real-world results—and when they arrive—could shift, hinging on assumptions and plenty of risk. Last week, Reuters spotlighted eMarketer analyst Jacob Bourne, who described co-packaged optics as key tech for sprawling AI clusters, though he cautioned that widespread rollout still hinges on slashing costs.
There are some nearer-term figures to watch. Lumentum is targeting March-quarter revenue between $780 million and $830 million, up from $665.5 million in the December period. In February, the company disclosed that its optical-circuit-switch backlog had topped $400 million. On top of that, there’s a separate co-packaged-optics order—worth several hundred million dollars—scheduled for delivery in the first half of 2027. Back then, Hurlston described Lumentum as being just at the “starting line” for both optical circuit switches and co-packaged optics. Lumentum Investor Relations
