Why I'm Buying Lumentum After The AI Optics Pullback (Rating Upgrade)

Lumentum's 15% pullback followed the Russell index removal and sector-wide profit-taking rather than deteriorating AI optics demand or fundamentals. Concerns over co-packaged optics timing compressed valuations, but Nvidia's optical roadmap continues supporting long-term photonics adoption and demand.

Consensus expects revenue to grow from $3.0 billion in FY2026 to $11.6 billion by FY2029, making execution increasingly critical. Despite trading around 19x forward sales, the recent correction improves the risk/reward profile, supporting a renewed Strong Buy rating.

The recent pullback in Lumentum Holdings Inc. ( LITE ) has enhanced the risk/reward profile without fundamentally changing the story on the AI optics front. The demand for applications in hyperscale networking, optical circuit switching, and next-generation photonics continues to be very high.