Investor interest in photonics is rising as hyperscalers ramp AI spending, fueling expectations for a multi-year boom for optical connectivity tech providers.

  • Lumentum’s fiscal fourth quarter revenue more than doubled to $1.01 billion.
  • Analysts expect Coherent’s fiscal fourth quarter revenue to rise 30% to $1.98 billion, which would be the highest pace of growth in three years.
  • Stocktwits sentiment was ‘extremely bullish’ for LITE and ‘bullish’ for COHR on Wednesday.

Lumentum Holdings’ stock surged 8% in premarket trading Wednesday after the company reported upbeat quarterly results, lifting peer photonics stocks as investors turn their focus to Coherent Corp.'s earnings report due after the market close.

Applied Optoelectronics’ shares rose 4%, Coherent’s shares rose 5.6%, and POET Technologies’ stock gained 2.6%. 

Lumentum’s fiscal fourth quarter revenue more than doubled to $1.01 billion, exceeding expectations of $987.70 million. Adjusted diluted EPS was $3.23, above an estimated $2.97 per share.

For the current quarter, Lumentum expects revenue in the range of $1.225 billion to $1.275 billion, as well as adjusted earnings per share between $4.05 and $4.35 – well above analysts’ expectations of $1.157 billion in revenue and $3.61 per share profit.

Coherent’s Q4 Expectations

Analysts expect Coherent’s fiscal fourth quarter revenue to rise 30% to $1.98 billion, which would be the highest pace of growth in three years. Adjusted profit is expected to rise 61% to $1.62 per share.

Currently, 16 out of 21 analysts rate the stock ‘Buy’ or higher and five rate it ‘Hold,’ per Koyfin. Their average price target of $394.62 implies a 20% upside to the stock’s closing price on Tuesday.

AI Hyperscaler Boost For Photonics

Coherent, POET, Lumentum Holdings and Applied Optoelectronics are all key suppliers in the fast-growing optical networking and photonics market. Coherent sells lasers, optical transceivers, silicon photonics, and advanced materials used to connect GPUs across massive AI clusters, while Lumentum and Applied Optoelectronics supply high-speed optical transceivers, lasers, and networking components that move data between AI servers. 

POET, a much smaller player, develops optical engines and its proprietary Optical Interposer platform designed to make AI optical modules cheaper, faster and more power efficient. 

Investor interest in all four has surged as hyperscalers ramp AI infrastructure spending, driving expectations of a multi-year boom in optical connectivity, which is increasingly viewed as a critical bottleneck in scaling next-generation AI data centers.

Retail View On Photonic Stocks

LITE was among the top 10 trending stocks on Stocktwits at the time of writing, with the retail sentiment for the stock climbing to ‘extremely bullish’ from ‘bullish.’ The sentiment was ‘bullish’ for COHR and POET, and ‘extremely bullish’ for Applied Optoelectronics. 

“$LITE analyst upgrade tomorrow $1000 to $1500. It’s going to be a juicy day,” a trader wrote. 

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