Core Viewpoint - The global AI infrastructure boom is creating a significant supply-demand imbalance in the optical communication industry, leading to unprecedented profit opportunities for the entire supply chain, particularly benefiting upstream chip manufacturers [3][4]. Group 1: Industry Trends - The optical communication industry is experiencing a structural shortage driven by AI, which is expected to sustain its growth and profitability beyond market expectations [3]. - The demand from global hyperscale AI and cloud service providers is expected to support the continuous growth of Chinese optical transceiver manufacturers [4]. Group 2: Company Performance - Lumentum (LITE) reported impressive results with Q4 FY25 revenue of $480.7 million, a year-on-year increase of 55.9%, and a turnaround from a net loss of $252.5 million to a profit of $213.3 million [5]. - LITE's forward guidance for Q1 FY26 estimates revenue between $510 million and $540 million, representing a quarter-on-quarter growth of 6%-12% and a year-on-year growth of 51%-60% [5]. - Coherent (COHR) showed stable growth, with Q4 FY25 revenue increasing by 16.4% year-on-year, driven by strong performance in the data center segment [7]. Group 3: Chip Supply and Demand - The EML chip supply bottleneck is highlighting opportunities in the industry, with LITE achieving record EML chip shipments and nearly doubling revenue year-on-year [6]. - LITE is transitioning from 3-inch wafers to 4-inch wafers to alleviate chip shortages, with plans to upgrade to 6-inch wafers in the future [6]. - The year 2026 is anticipated to be a breakthrough year for the shipment of 100G and 200G laser chips [7]. Group 4: Data Center Business - The data center and communication business contributed 62% of total revenue, growing 39% year-on-year to $942 million [8]. - The company began shipping 1.6T transceivers in Q2 and expects significant revenue contributions from these products in FY26 [8].

Core Insights - The strong performance of Lumentum (LITE) and Coherent (COHR) in Q2 indicates a significant supply-demand imbalance in the optical communication industry driven by the global AI infrastructure boom [1] - Nomura Securities suggests that the current AI-driven optical communication industry cycle has greater sustainability and growth potential than previously expected, creating unprecedented profit opportunities across the supply chain [1] Company Performance - Lumentum reported Q4 FY25 revenue of $480.7 million, a year-over-year increase of 55.9%, with GAAP net profit turning from a loss of $252.5 million in the same period last year to a profit of $213.3 million [2] - Lumentum's forward guidance for Q1 FY26 estimates revenue between $510 million and $540 million, representing a quarter-over-quarter growth of 6%-12% and a year-over-year growth of 51%-60% [2] - Coherent's Q4 FY25 revenue grew by 16.4% year-over-year, with non-GAAP earnings increasing by 73.6% to $192 million, driven by strong performance in the data center segment [2] Market Dynamics - The EML chip supply bottleneck is creating significant opportunities for the optical communication industry, with Lumentum transitioning from 3-inch wafers to 4-inch wafers to alleviate chip shortages [3] - The data center and communication segments contributed 62% of total revenue, which grew by 39% year-over-year to $942 million [4] - The company began shipping 1.6T transceivers in Q2 and expects meaningful revenue contributions from these products in FY26 [4]

Core Insights - Lumentum Holdings Inc. reported better-than-expected earnings for Q4, with earnings of 88 cents per share, surpassing the analyst consensus estimate of 80 cents per share [1] - The company achieved quarterly sales of $480.700 million, exceeding the analyst consensus estimate of $465.756 million [1] - For Q1, Lumentum expects adjusted EPS between 95 cents and $1.10, with sales projected between $510.000 million and $540.000 million [1] Performance Highlights - The company experienced strong demand across its cloud products supporting AI data centers, leading to revenue exceeding the high end of previously revised guidance [2] - Notable strength was observed in components such as EML chips, pump lasers, and narrow linewidth laser assemblies for data center interconnect, as well as 800G modules [2] - Lumentum anticipates continued strong demand for AI data center and long-haul solutions, projecting quarterly revenue to surpass $600 million by June 2026 or earlier [2] Analyst Reactions - Needham analyst Ryan Koontz maintained a Buy rating and raised the price target from $135 to $145 [5] - B of A Securities analyst Vivek Arya upgraded Lumentum from Underperform to Neutral, increasing the price target from $78 to $135 [5] - Multiple analysts raised their price targets, with notable increases from Stifel, Raymond James, and Barclays, reflecting positive sentiment towards the company's performance and outlook [5]

Core Insights - The article highlights the investment strategies and performance of Chris Lau, an experienced investor and economist, focusing on undervalued stocks and dividend-growth income stocks [1][2]. Group 1: Investment Strategies - The investment group DIY Value Investing shares top stock picks that are undervalued and have upcoming catalysts that the market does not expect [2]. - The group also provides recommendations for dividend-income stocks that have a long history of dividend growth, including a printable calendar and quantitative scores [2]. - Additionally, there are speculative picks aimed at high-risk allocations with potential for significant returns, described as "moonshot" opportunities [2]. Group 2: Performance Metrics - The average return for public articles in 2023 was 8.4%, an increase from 6.9% in 2022, and a notable rise from 29.9% in 2021 [2].

Financial Data and Key Metrics Changes - The fourth quarter revenue was $480.7 million, with non-GAAP EPS of $0.88, both exceeding the high end of revised guidance [18] - Fiscal year 2025 net revenue was $1.65 billion, up 21% from fiscal year 2024 [20] - Non-GAAP gross margin for the fourth quarter was 37.8%, up 260 basis points sequentially and up 1,000 basis points year on year [18] - Non-GAAP operating margin for the fourth quarter was 15%, up 420 basis points sequentially and over 2,000 basis points year on year [18] Business Line Data and Key Metrics Changes - Cloud and networking segment revenue for Q4 was $424.1 million, increasing 16% sequentially and 67% year on year [21] - Industrial tech segment revenue was $56.6 million, down 6% sequentially but up 6% year on year [22] - Cloud modules revenue grew by 50% quarter over quarter, contributing significantly to sequential revenue growth [12] Market Data and Key Metrics Changes - The demand for optical hardware and bandwidth is growing dramatically due to the central role of AI in customer business strategies [6][7] - The company expects to surpass $600 million in quarterly revenue by June 2026 or earlier, driven by strong growth in cloud and networking [9] Company Strategy and Development Direction - The company is focused on three significant areas for long-term growth: cloud modules, optical circuit switching (OCS), and co-packaged optics (CPO) [12] - The company is investing in manufacturing capacity to support cloud customers and is expanding its in-house OCS manufacturing capacity to meet high demand [13][14] - The company aims to maintain a competitive advantage through innovation in optical technologies and strategic partnerships with hyperscalers [7][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver continued top-line growth and margin expansion, driven by the rapid adoption of AI [17] - The company anticipates 2026 to be a breakout year for laser chip sales, particularly for 100 and 200 gig lane speeds [11] - Management noted that the tariff situation is fluid but believes their products are exempt from potential semiconductor tariffs [54] Other Important Information - The company is transitioning from three-inch to four-inch wafers to increase capacity and is also looking to expand to six-inch wafers in the future [104][109] - The company has received a significant order for 200 gig line speed EML chips, expected to be filled in December [10] Q&A Session Summary Question: Update on OCS award and revenue trajectory - Management indicated that the revenue ramp for OCS is better than expected, with significant revenues anticipated in early 2026 and a more meaningful inflection point in the second half of 2026 [30] Question: CPO opportunity and competitive landscape - Management feels confident in maintaining a competitive edge in the CPO market due to unique power levels and reliability of their lasers [33] Question: Contributions to the $600 million revenue target - Management expects continued strength in the components business and significant contributions from cloud modules and OCS [39] Question: Impact of semiconductor tariffs - Management believes their products are exempt from tariffs and has not seen material changes in business operations due to tariffs [54] Question: EML wafer fab capacity and pricing dynamics - Management is transitioning to larger wafers to increase capacity and anticipates that pricing discussions will become more significant in the coming quarters due to limited supply [106][109] Question: Profitability arc of OCS product offering - Management stated that OCS will be significantly above corporate margin averages and will be accretive to margins as volume increases [112]

Financial Data and Key Metrics Changes - Fourth quarter revenue was $480.7 million, exceeding the high end of revised guidance, with non-GAAP EPS of $0.88 [16] - Fiscal year 2025 net revenue was $1.65 billion, up 21% from fiscal year 2024 [19] - Non-GAAP gross margin for the fourth quarter was 37.8%, up 260 basis points sequentially and 1,000 basis points year over year [17] - Non-GAAP operating margin for the fourth quarter was 15%, up 420 basis points sequentially and over 2,000 basis points year on year [17] Business Line Data and Key Metrics Changes - Cloud and networking segment revenue for Q4 was $424.1 million, increasing 16% sequentially and 67% year over year [20] - Industrial tech segment revenue was $56.6 million, down 6% sequentially but up 6% year over year [21] - Cloud and networking segment profit was 23.6%, up 360 basis points sequentially and 1,350 basis points year over year [21] Market Data and Key Metrics Changes - The company expects to surpass $600 million in quarterly revenue by June 2026 or earlier, driven by strong demand in cloud and AI applications [6][7] - Cloud revenue is growing over 20% annually, with expectations for continued strength in components and cloud modules [6][37] Company Strategy and Development Direction - The company is focusing on three significant growth areas: cloud modules, optical circuit switching (OCS), and co-packaged optics (CPO) [10] - The company is positioned to capture significant value from the AI infrastructure market, with technologies projected to become multibillion-dollar markets within five years [6] - The company is expanding its manufacturing capacity to meet high demand, particularly in the cloud and networking segment [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth driven by the rapid adoption of AI, highlighting the effectiveness of their strategy and operational resilience [14] - The company anticipates a breakout year for laser chip sales in 2026, with demand expected to outpace supply [9] - Management noted that the tariff situation is fluid but does not expect material changes to business operations due to tariffs [53][56] Other Important Information - The company invested $59 million in CapEx during Q4, primarily focused on manufacturing capacity to support cloud customers [20] - The company is transitioning from three-inch to four-inch wafers to increase capacity [102] Q&A Session Summary Question: Update on OCS award and revenue trajectory - Management indicated that the OCS revenue is ramping better than expected, with significant revenue anticipated in early 2026 and a more meaningful inflection point in the second half of 2026 [29][30] Question: CPO opportunity and competitive landscape - Management feels confident in maintaining a competitive edge in the CPO market due to unique power levels and reliability of their lasers [32] Question: Contributions to the $600 million revenue target - Management expects continued strength in components, significant contributions from cloud modules, and revenue from OCS to help achieve the target [37] Question: Semiconductor tariffs impact - Management believes their products are exempt from new tariffs and does not expect material impacts on operations [53][56] Question: EML wafer fab capacity and pricing dynamics - Management confirmed they are transitioning to larger wafers to increase capacity and anticipate pricing discussions to become more significant due to limited supply and high demand [102][104] Question: Profitability of OCS product offering - Management stated that OCS will be significantly above corporate margin averages and will be accretive to margins as volume ramps up [110]

Q4 FY25 Performance - Revenue reached $480.7 million[9,10,11,13], a 16% increase QoQ[8] and a 67% increase YoY[8] - Non-GAAP gross margin was 37.8%[10], compared to 35.2% in Q3 FY25[10] and 27.8% in Q4 FY24[10] - Non-GAAP operating income was $72.3 million[10], resulting in a 15.0% operating margin[10] - Non-GAAP diluted EPS was $0.88[10], compared to $0.57 in Q3 FY25[10] and $(0.13) in Q4 FY24[10] Segment Performance - Cloud & Networking revenue was $424.1 million[11] - Industrial Tech revenue was $56.6 million[11] Key Growth Drivers - Strong cloud demand, particularly from hyperscale customers, drove revenue growth[8] - Cloud module shipments exceeded the 50% QoQ growth target[8] - EML business approximately doubled compared to Q4 FY24[8] Q1 FY26 Guidance (Non-GAAP) - Revenue is projected to be between $510 million and $540 million[13] - Operating margin is expected to be between 16.0% and 17.5%[13] - Diluted EPS is projected to be between $0.95 and $1.10[13]

NEWS RELEASE LUMENTUM ANNOUNCES FOURTH QUARTER AND FULL FISCAL YEAR 2025 RESULTS Fiscal Fourth Quarter Highlights: Fiscal Year 2025 Highlights: San Jose, Calif., August 12, 2025 – Lumentum Holdings Inc. ("Lumentum" or the "Company") today reported results for its fourth quarter and full fiscal year ended June 28, 2025. "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 Pres ...

Core Viewpoint - Lumentum Holdings Inc. is expected to report significant growth in earnings and revenue for the fourth quarter, indicating a positive outlook for the company [1]. Financial Performance - Analysts predict Lumentum will report quarterly earnings of 81 cents per share, a substantial increase from 6 cents per share in the same quarter last year [1]. - The projected quarterly revenue is $469.92 million, compared to $308.3 million a year earlier, reflecting a strong year-over-year growth [1]. Company Developments - On August 7, Lumentum announced the expansion of its U.S.-based semiconductor facility, which may enhance its production capabilities and market position [2]. Stock Performance - Lumentum shares experienced a slight decline of 1.1%, closing at $115.03 on Monday [3]. Analyst Ratings - Morgan Stanley maintained an Equal-Weight rating and raised the price target from $85 to $92 [8]. - Susquehanna maintained a Positive rating and increased the price target from $95 to $125 [8]. - JP Morgan maintained an Overweight rating and boosted the price target from $100 to $123 [8]. - Wolfe Research initiated coverage with an Outperform rating [8]. - Rosenblatt maintained a Buy rating with a price target of $105 [8].

Group 1: Company Overview - Lumentum (LITE) currently holds a Momentum Style Score of A, indicating strong potential for momentum investing [3][12] - The company has a Zacks Rank of 2 (Buy), which is supported by a historical track record of outperforming the market [4][12] Group 2: Price Performance - Over the past week, LITE shares increased by 2.07%, while the Zacks Communication - Components industry declined by 2.32% [6] - In the last month, LITE's price change was 19.99%, significantly outperforming the industry's 0.47% [6] - Over the past quarter, Lumentum shares rose by 42.91%, and over the last year, they increased by 156.41%, compared to the S&P 500's gains of 13.04% and 23.38%, respectively [7] Group 3: Trading Volume - LITE's average 20-day trading volume is 2,094,186 shares, which serves as a bullish indicator when combined with rising stock prices [8] Group 4: Earnings Outlook - In the past two months, two earnings estimates for LITE have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from $1.97 to $1.99 [10] - For the next fiscal year, three estimates have moved upwards with no downward revisions during the same period [10]