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Three major optical communication stocks have doubled this year. Will the momentum continue?
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Breakdown of Lumentum's 2026 OFC Investor Briefing: Four Major Business Layouts and Expansion Plans Driven by AI Computing Power Demand

Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals.
This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market!
1. What is driving Lumentum's growth?
The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft).
Their capital expenditure (CAPEX) is expected to exceed $650 billion in 2026, with a year-on-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into huge demand for Lumentum’s high-speed optical modules and key optical components.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
2. What are the 'four core engines' driving the company's growth?
To address the 80% east-west traffic (intra-cluster xPU to xPU), Lumentum has established four core engines, whichThey will jointly drive the company's quarterly revenue to surpass the $2 billion mark:
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
1. Cloud Transceivers:
Leading Position:It has become the preferred supplier for 1.6T optical modules, with mass production and shipments expected to commence this summer (2026).
Technological Transition:In high-speed channels of AI data centers, the market is transitioning from VCSEL to InP (Indium Phosphide). The market share of InP is expected to soar from 44% in 2022 to 91% by 2030.
2. Optical Circuit Switches (OCS):
Explosive Growth:From 2025 to 2028, the compound annual growth rate (CAGR) of OCS shipments is projected to exceed 150%, with a target of achieving over $1 billion in annualized revenue by 2027.
Technology Advantages:Utilizing MEMS technology with over 20 years of proven performance, it features ultra-low power consumption (less than 10% of packet switches) and extremely low fixed latency (tens of nanoseconds). Multi-year agreements worth billions of dollars have already been signed.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
3. Scale-Out CPO
Business Progress:As the foundation of the UHP platform, mass production ramp-up at the scale of hundreds of millions of dollars is expected to commence in 2027, and the company’s current production capacity is already sufficient to support the needs of this phase.
4. Scale-Up CPO
Market Potential:As copper wire transmission reaches its physical limits, optical communication is ushering in a generational shift. The market size for the first phase of Scale-Up CPO is estimated to be 3 to 4 times that of Scale-Out, with the first products expected to ship by the end of 2027.
III. Optical Communication Total Addressable Market (TAM) and Backlog Orders
Explosive Growth of TAM:The overall industry revenue is expected to surge from $180 billion in 2025, growing at a compound annual growth rate (CAGR) of approximately 40%, to exceed $900 billion by 2030. By then, Scale-out architecture will account for 55% of the market share, while Scale-up will take up 45%.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Strong Order Backlog:Benefiting from AI investments, Lumentum’s backlog has reached an all-time high.
Laser chips (EML, CW): Backlog exceeds two years.
UHP and OCS: Both have multi-year backlogs.
Cloud optical modules and DCI/telecom equipment: Backlog extends up to one year.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Fourth, what technical bottlenecks has AI introduced? How is Lumentum addressing them?
The current technical bottleneck for AI is the “Copper Wall.” As bandwidth increases to 1.6T/3.2T, the transmission distance of traditional copper wires becomes severely limited, even failing to meet inter-cabinet connection requirements, necessitating a shift to optical connections.
Based on this,Based on this, Lumentum is aggressively expanding its production capacity for key optical chips.However, AI has caused the compound annual growth rate (CAGR) of indium phosphide (InP) demand to soar by approximately 85%, resulting in capacity shortages.
Lumentum is increasing EML laser output more than eightfold and has acquired a new wafer fab, aiming to add $5 billion in annual revenue capacity, with production expected to commence by early 2028.
V. Looking Ahead: Capacity Data and High-Profit Financial Model
This investment strategy also signals to investors that Lumentum is optimizing its profitability by investing in R&D and strategic capital expenditures, such as new wafer fabs.
Capacity Data:
InP Capacity: The EML unit capacity by the end of 2026 is expected to increase by more than 50% compared to the end of 2025.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
UHP Laser Chips: The unit CAGR from CY25 to CY30 is expected to exceed 200%.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Financial Model Targets:
Revenue target:Aiming to push quarterly revenue to $2 billion (annualized revenue of $8 billion). Upon achieving this goal, the business share of 'new growth drivers' is expected to reach 60%.
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Margin Expansion:The target is to expand operating margin by over 1,000 basis points within two years. Under the model of $2 billion quarterly revenue, expectations are:
Gross Margin: 49% - 52%
Operating Margin: 38% - 42%
Riding the wave of explosive growth in AI computing power, the optical communications giant $Lumentum (LITE.US)$ has become an absolute focus under the spotlight of the capital market this year thanks to its strong performance and recognition from top-tier chipmaker NVIDIA. At the OFC conference in Los Angeles on March 17, 2026, Lumentum seized the vast market opportunity brought by AI data centers and unveiled its core technology barriers, capacity expansion blueprint, 'four engines' driving revenue, and impressive financial goals. This article will provide a deep analysis of Lumentum’s investor briefing, offering a comprehensive view of the key signals this optical communications leader is sending to the market! 1. What is driving Lumentum's growth? The most fundamental driver of Lumentum’s growth stems from the explosive demand for AI infrastructure. Training AI models leads to traffic within data centers ("east-west") accounting for as much as80%, directly triggering an 'optical communications arms race' among top cloud service providers (AWS, Google, Meta, Microsoft). These giants’ capital expenditures (CAPEX) are projected to exceed $650 billion in 2026, with a year-over-year increase of over 70%. Their massive investments in AI computing power are quickly and directly translating into demand for Lumentum’s high-speed optical modules and key optical components...
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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