AI data center demand is straining optical component supplies, according to Lumentum Holdings’ Michael Hurlston.

  • Lumentum expects significant supply shortfalls for some products through 2028.
  • Nvidia invested $2 billion each in Lumentum and peer Coherent earlier this year.
  • AAOI shares rose 3% in overnight trading late Thursday, leading gains among optics stocks, after Hurlston’s comments.

Optical component stocks jumped in overnight trading late Thursday after Lumentum Holdings Inc. (LITE) CEO Michael Hurlston said the company’s optoelectronic products were completely sold out through early 2029, underscoring surging demand for AI data center infrastructure.

Shares of Applied Optoelectronics Inc. (AAOI) rose 3%, while Lumentum and Coherent Corp. (COHR) rose about 1.4% each and POET Technologies (POET) gained nearly 1%.

In an interview with Bloomberg in Tokyo on Friday, Hurlston said Lumentum was struggling to keep up with demand from technology companies racing to build faster AI data centers.

The company cannot meet demand for some products through next year and expects a 30% shortfall for others through 2028, he said. “We are completely sold out, so there’s no end in sight,” Hurlston told the news agency.

The latest comments reinforce his earlier outlook that Lumentum’s production capacity would be fully booked through 2028, highlighting growing supply constraints in the optical components industry.

Nvidia Backs Optical Component Makers

Lumentum supplies advanced indium phosphide devices that enable high-speed data transmission and cloud computing. The technology is becoming increasingly important as AI workloads require faster connections between servers and computing systems.

Nvidia Corp. (NVDA) invested $2 billion each in Lumentum and Coherent earlier this year, highlighting the growing importance of optical technologies to its AI infrastructure strategy.

However, expanding production capacity remains a challenge. Hurlston said building new manufacturing capacity takes three to five years, although hyperscalers are willing to shoulder some of the capital expenditure risk through long-term commitments.

Optical Stocks Ride AI Infrastructure Boom

Optical component stocks have been among the biggest beneficiaries of this year's AI infrastructure rally, as hyperscalers ramp up spending on data centers and high-speed networking.

LITE stock has gained 185% year-to-date, while Coherent and Applied Optoelectronics shares have surged 64% and 204%, respectively.

On Stocktwits, retail sentiment for AAOI rose to ‘extremely bullish’ from ‘bullish’ as of late Thursday. Sentiment remained ‘bullish’ for LITE and ‘bearish’ for COHR and POET.

“AAOI wouldn’t be surprised to see this rip higher like nobody’s business tomorrow. I loaded the boat today,” said a trader. 

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