Lumentum's Q4 Earnings Surge Driven by AI and Cloud Demand, Analysts Raise Price Targets

Lumentum Analysts Boost Their Forecasts Following Upbeat Q2 Results - Lumentum Holdings (NASDAQ:LITE)

Lumentum Holdings Inc. LITE reported better-than-expected earnings for the fourth quarter on Tuesday. The company posted quarterly earnings of 88 cents per share which beat the analyst consensus estimate of 80 cents per share. The company reported quarterly sales of $480.700 million which beat the analyst consensus estimate of $465.756 million. Lumentum Holdings said it sees first-quarter adjusted EPS of 95 cents to $1.10 and sales of $510.000 million to $540.000 million. "In our fiscal fourth quarter, we executed exceptionally well in meeting robust demand across our portfolio of cloud products supporting AI data centers," said Michael Hurlston, Lumentum President and CEO. "This solid performance, combined with sustained customer demand, drove our Q4 revenue above the high end of the upwardly revised guidance we provided in early June. The outperformance was broad-based across our cloud-focused business, with particular strength in components, specifically EML chips, pump lasers, and narrow linewidth laser assemblies for data center interconnect, as well as 800G modules. Looking ahead, we expect continued strong demand for our AI data center and long-haul solutions, giving us confidence in surpassing $600 million in quarterly revenue by June 2026 or earlier." Lumentum shares fell 0.1% to trade at $119.52 on Wednesday. These analysts made changes to their price targets on Lumentum following earnings announcement. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Needham analyst Ryan Koontz maintained Lumentum with a Buy and raised the price target from $135 to $145. B of A Securities analyst Vivek Arya upgraded Lumentum from Underperform to Neutral and raised the price target from $78 to $135. Stifel analyst Ruben Roy maintained Lumentum with a Buy and raised the price target from $100 to $132. B. Riley Securities analyst Dave Kang maintained the stock with a Neutral and raised the price target from $73 to $83. Raymond James analyst Simon Leopold maintained Lumentum with a Strong Buy and raised the price target from $125 to $145. Barclays analyst Tom O'Malley maintained the stock with an Overweight rating and raised the price target from $75 to $135. Susquehanna analyst Christopher Rolland maintained Lumentum with a Positive and raised the price target from $125 to $140. Morgan Stanley analyst Meta Marshall maintained the stock with an Equal-Weight rating and raised the price target from $92 to $100. UBS analyst David Vogt maintained Lumentum with a Neutral and raised the price target from $78 to $130. Considering buying LITE stock? Here's what analysts think: Read This Next: Top 2 Tech & Telecom Stocks That May Fall Off A Cliff In Q3 Photo via Shutterstock LITELumentum Holdings Inc$119.63-0.03%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum95.66Growth1.52QualityN/AValue21.47Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Lumentum Q4 Revenue and Margins Surge | The Motley Fool

Lumentum(LITE 0.46%) reported fourth quarter fiscal 2025 results on August 12, 2025, with non-GAAP revenue of $480.7 million and non-GAAP EPS of $0.88, both exceeding the high end of guidance. The company's non-GAAP gross margin rose to 37.8%, up 260 basis points quarter-over-quarter and 1,000 basis points year-over-year, driven by a 67% year-over-year surge in cloud and networking revenue and strong demand for high-speed laser components and optical circuit switches. The following insights highlight the company's capacity constraints, new product milestones, and margin expansion, all of which shape the outlook for fiscal 2026 and beyond. Cloud and networking segment revenue reached $424.1 million, up 16% quarter-over-quarter and 67% year-over-year (non-GAAP), propelled by record electro-absorption modulated laser (EML) shipments and robust demand from hyperscale cloud customers. The company's wafer fab expansion is ongoing, but manufacturing capacity for laser assemblies remains supply-constrained, with a substantial 200-gig line speed EML chip order scheduled for delivery in December (fiscal Q2 2026). "Our wafer fab expansion is progressing on schedule, enabling us to support higher volumes of EMLs and other indium phosphide-based devices, including CW lasers and coherent components. Recently, we received a substantial order for 200 gig line speed EML chips, which we expect to fill in December. Overall, we expect 2026 to be a breakout year for laser chip sales of both 100 gig and 200 gig lane speeds. Shipments of our narrow linewidth lasers, which are critical components for ZR and ZR plus modules, have now grown for six consecutive quarters. While our manufacturing capacity for these laser assemblies continues to ramp, demand is outpacing supply and is expected to do so through the rest of fiscal 2026." -- Michael Hurlston, President and Chief Executive Officer Persistent supply-demand imbalance is enabling Lumentum to maintain pricing power and margin expansion, positioning the company to benefit from ongoing AI and cloud infrastructure investment cycles. The company recorded its first optical circuit switch (OCS) revenues with two hyperscale cloud customers and secured a third for deployment in calendar 2026, while also receiving its largest-ever purchase commitment for ultra-high-power lasers used in co-packaged optics (CPO). Lumentum is accelerating in-house OCS manufacturing capacity and investing in U.S.-based indium phosphide wafer fabrication to support these opportunities. "In optical circuit switches, or OCS, we recognized our first revenue in the quarter with shipments to two hyperscale customers. Not only is our order book expanding with these two customers, but we now have a third hyperscale customer committed to deploy our OCS product in calendar 2026. Our leadership in optical performance, particularly in 300 by 300 form factors, has allowed us to capture volume opportunities earlier than competitors. As a result, we are accelerating the expansion of our in-house OCS manufacturing capacity to meet the high level of demand. Our commitment to co-packaged optics, or CPO, is stronger than ever. We just received the largest single purchase commitment in company history for our ultra-high power lasers, and we have already announced additional investment in our US-based indium phosphide wafer fab to support it. Our investments in this facility will position us for a significant revenue ramp in CPO by 2026." -- Michael Hurlston, President and Chief Executive Officer These developments signal Lumentum's ability to secure long-term, high-value partnerships with leading cloud providers and to capture multi-hundred-million-dollar opportunities in emerging photonics markets. Gross margin increased by 1,000 basis points year-over-year to 37.8% (non-GAAP), while non-GAAP operating margin rose by over 2,000 basis points year-over-year to 15%, and Adjusted EBITDA reached $98.7 million. These improvements were driven by higher manufacturing utilization, a favorable product mix emphasizing datacom lasers and modules, and disciplined cost management, even as capital expenditures rose to $59 million to support future demand. "Non-GAAP gross margin was 37.8%, up 260 basis points sequentially and 1,000 basis points year on year, due to better manufacturing utilization and favorable product mix as a result of increased datacom laser shipments. Fourth quarter non-GAAP operating margin was 15%, which was up 420 basis points sequentially and up over 2,000 basis points year on year, primarily driven by improved cloud and networking profitability." -- Wajid Ali, Executive Vice President and Chief Financial Officer Lumentum's ability to expand both gross and operating margins while investing in capacity and innovation supports a structurally higher earnings base and greater flexibility for future growth initiatives. Management projects fiscal Q1 2026 non-GAAP revenue of $510 million to $540 million, non-GAAP operating margin of 16% to 17.5%, and non-GAAP diluted EPS of $0.95 to $1.10. Quarterly revenue (non-GAAP) is expected to surpass $600 million by fiscal Q4 2026 or earlier, with non-GAAP gross margin anticipated to approach 40% at that run-rate. No material impact from semiconductor tariffs is expected due to current exemptions, and ongoing portfolio optimization and manufacturing shifts are expected to further support operational focus and risk mitigation.

Lumentum Revenue Jumps 56 Percent in Q4

Lumentum (LITE -0.30%), a maker of optical and photonic components for cloud, networking, and industrial applications, released its fiscal fourth-quarter results on August 12, 2025. The key news: GAAP revenue reached $480.7 million, beating the average analyst estimate by $10.78 million (GAAP), while non-GAAP earnings per share (EPS) landed at $0.88, also above expectations. This performance was powered by surging demand in the Cloud & Networking segment and significant gains in profitability. Gross margin and operating margin (GAAP and non-GAAP) improved sharply year over year. Results topped the company's recently raised guidance and showed broad-based momentum, positioning the company for further gains. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report. About Lumentum: Business Model and Key Focus Areas Lumentum designs and manufactures advanced optical and photonic components. Its products are used in cloud data centers, artificial intelligence (AI) infrastructure, high-speed networking, and industrial applications. The company's main revenue drivers are high-speed optical transceivers and laser components used for data transmission in cloud environments and telecom networks. Recently, Lumentum has focused on ramping up its Cloud & Networking segment while managing challenges in its Industrial Tech business. Success depends on continued demand from cloud service providers, the ability to innovate in optical technology, and effective management of global supply chains and regulatory risks. Strategic acquisitions and internal manufacturing investments are intended to strengthen its competitive edge. Q4 2025: Key Developments and Data-Driven Insights The standout in the quarter was the Cloud & Networking segment. This part of the business provides components such as electro-absorption modulated lasers (EMLs), pump lasers, and optical transceivers for AI and data center customers. Revenue in this segment surged 66.5% year over year, reaching $424.1 million and comprising 88.2% of total company revenue. Management described "outperformance" in next-generation components, including 800G modules, with customer demand outpacing available supply. Lumentum reported its highest-ever EML chip shipments as it ramped up production at new facilities in Thailand. These chips are critical for high-speed optical data communications. The company's internal manufacturing shift for data center interconnect (DCI) products improved both margins and capacity in recent quarters. As a result, the company shifted margin dollars from third-party manufacturers to itself. The Industrial Tech segment, covering lasers used in manufacturing and consumer electronics, delivered mixed results. Revenue for this segment fell 5.7% quarter over quarter. Full-year revenue for this segment was down 14.6% in FY2025 as the company faced weak industrial laser demand and a seasonal dip in 3D sensing products. Management took action by closing noncore R&D sites and concentrating on core, profitable laser lines. New ultrafast lasers for solar cell manufacturing and advanced material processing offer some opportunity, but this segment continues to lag the main business. The company is dealing with ongoing tariff and supply chain pressures. Gross margin guidance includes a 100-basis-point headwind due to U.S. tariffs on components linked to China, with the risk of further impact if tariffs extend to products made in Thailand. Supply chain tightness, particularly for critical lasers and modules, remains an operational hurdle, although investments in new manufacturing capacity are intended to relieve these constraints by year-end. Inventory levels rose to support Cloud & Networking growth. Looking Ahead: Guidance and What to Watch Management is guiding for net revenue between $510 million and $540 million in Q1 FY2026. Non-GAAP operating margin is expected to increase to 16.0% to 17.5%, while non-GAAP EPS guidance is $0.95 to $1.10. These forecasts reflect management's strong confidence in continued AI and cloud-driven demand. The leadership team also reiterated its target of reaching $600 million in quarterly revenue by June 2026, driven by capacity additions and product ramp-ups. Investors should monitor progress on supply expansion, tariff impacts, and execution in the Industrial Tech segment. Ongoing capacity buildouts in Thailand aim to lift output by 50% for data center interconnect products by the end of calendar year 2025. Management's guidance does factor in a 100 basis-point reduction in gross margin from tariffs. Future risks include continued supply constraints, regulatory uncertainties, and customer spending trends in hyperscale cloud markets. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.