Key Takeaways:
Lumentum Holdings surged 14% to $932 after reporting fiscal Q4 adjusted EPS of $3.23 on revenue of $1.01 billion, up 109.3% year over year.
"Lumentum is positioned at the heart of a secular industry shift," CEO Michael Hurlston said. "As AI compute workloads increase in both speed and bandwidth, data center architects are turning to optical links as a primary means of connectivity."
Adjusted EPS beat the $2.99 consensus. Non-GAAP gross margin expanded 1,260 basis points to 50.4%. Management guided Q1 FY27 revenue to $1.225 billion to $1.275 billion with EPS of $4.05 to $4.35, hitting its target operating model more than a quarter ahead of schedule. Components revenue jumped 102.7% and Systems climbed 122.6%, both fueled by hyperscaler transceiver and 1.6T module demand.
The beat dragged the entire optical complex higher. Nokia climbed 9% to $10, Celestica advanced 9% to $339, Ciena jumped 11% to $432, and Applied Optoelectronics added 3% to $138. Lumentum trades at a forward P/E near 47 after climbing 153% year to date and 679% over the past year.
Nokia's move extended momentum from its July 23 earnings beat where AI and cloud orders reached about 2.8 billion euros. Analyst target hikes from BofA and SEB added fuel, and its NVIDIA-partnered AI-RAN platform ties it directly to the day's optics narrative. The Infinera acquisition has already deepened Nokia's optical networking exposure.
Celestica advanced with no company-specific catalyst, a pure read-through on AI hardware demand. Its Connectivity & Cloud Solutions segment already grew 84% year over year to $3.81 billion last quarter, and management raised FY26 revenue guidance to $20.5 billion.
Applied Optoelectronics posted a more muted move after a strong run. AAOI is up 296.1% year to date, with its datacenter segment more than doubling last quarter and 800G volumes ramping fast.
Ciena was the biggest halo mover. Its cloud provider revenue reached 46% of total last quarter, up 70% year over year, and CEO Gary Smith has said his strategy is "tightly aligned to the structural, multi-year opportunities created by AI-driven demand."
Reports of an FCC plan to restrict new Chinese optical transceivers added a tailwind for Western suppliers.
The rally has pushed valuations to stretched levels across the group. Each name in this cohort is now exposed to hyperscaler AI capex plans, transceiver supply capacity, and geopolitical trade policy. Nokia specifically faces order-to-revenue conversion questions and cash-flow scrutiny that a strong stock move masks. Still, optics continues to have significant tailwinds as copper hits its physical limits and more optics is required to continue networking large clusters of AI accelerators. Investors are paying up significantly for optics stocks, but they'll likely see revenue growth that outpaces the broader AI infrastructure space for years to come.
This article is for informational purposes only and does not constitute investment advice.
