LITE Stock Heads For 4th Day In Green: Morgan Stanley Bets On AI Optics, Retail Is Bullish

Lumentum is seeing surging demand for optical-based AI applications and is set to build on its 859% gain over the last one year.

• Morgan Stanley said that, on the back of faster speeds and increased investment in AI data centers, its base case is that optical markets are set to grow to $65 billion or more by 2028, from about $30 billion in 2025.
• In early February, B. Riley said that it prefers Lumentum over Coherent, as the former remains the best-in-class pure-play for AI-driven optical infrastructure.
• Wall Street analysts have an average ‘Strong Buy’ rating on the stock, according to Koyfin, with 18 out of 22 analysts rating it ‘Buy’ or higher and four ‘Hold.’

Lumentum Holdings’ stock rises nearly 1% in overnight trading, heading for a fourth-day of gains if momentum holds into trading hours on Tuesday, as the company’s investments in artificial intelligence have helped boost both investor and retail trader optimism.

A surge in AI-driven upgrades to optics and photonic technologies that power the networks and infrastructure behind AI, as well as cloud computing, is helping drive growth at the company. Lumentum provides high-performance lasers, modules, and optical subsystems that enable data center connectivity, advanced telecom networks, industrial manufacturing, and sensing applications.

Wall Street’s View On LITE

On Monday, Morgan Stanley raised the firm's price target on Lumentum to $520 from $420 and maintained an ‘Equal Weight’ rating, according to TheFly. The firm noted that, on the back of increasing speed and investment in AI data centers, its base case is that optical markets are set to grow to $65 billion and more by 2028 from about $30 billion in 2025.

Morgan Stanley said that as traditional networks reach their limits, new optical technologies are poised for adoption, potentially adding $23 billion in total addressable market and taking the industry to about $90 billion.

In early February, B. Riley said that it prefers Lumentum over Coherent, as the former remains the best-in-class pure-play for AI-driven optical infrastructure.

Wall Street analysts have an average ‘Strong Buy’ rating on the stock, according to Koyfin, with 18 out of 22 analysts rating it ‘Buy’ or higher and four ‘Hold.’ The stock has an average price target of $576, which represents nearly a 15% downside from its last closing price of $674.73.

How Are Stocktwits Users Reacting?

Retail sentiment on Lumentum was in the ‘bullish’ territory, compared to ‘bearish’ a month ago, with message volumes at ‘high’ levels, according to data from Stocktwits.

A user on Stocktwits noted that the stock is urging on AI optical demand and pushing 1W RSI into overbought territory.

Shares of Lumentum have gained nearly 859% in the last 12 months.

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