Lumentum revenue growth due to increased demand for artificial intelligence

Photonic component manufacturer Lumentum says that its sales revenues will exceed half a billion dollars in the current quarter - and surpass $600 million this time next year, as demand from artificial intelligence (AI) data centers continues to accelerate.

CEO Michael Hurlston announced a sales figure of just under $481 million for the quarter that ended June 28, up 56 per cent year-on-year and beating the guidance range of between $440 million and $470 million set in May.

“Demand for optical hardware and bandwidth is growing dramatically,” he told an investor conference call discussing the latest results, citing components including 200 Gb/s externally modulated lasers (EMLs), 1.6 Tb/s optical transceivers, optical circuit switches, and ultra-high power lasers for co-packaged optics (CPO) as “essential” to the current AI build-out.

“These new technologies are projected to become multi-billion dollar markets within five years,” Hurlston added.

Fab expansion
Having highlighted the major ongoing investment at its San Jose, California, indium phosphide (InP) wafer fabrication facility last week, Hurlston said that the effort was progressing on schedule, supporting higher volumes of EMLs, as well as continuous-wave lasers and other coherent components needed for CPO applications.

“Recently, we received a substantial order for 200 Gb/s lane speed EML chips, which we expect to fill in December,” he added. “Overall, we expect 2026 to be a breakout year for laser chip sales of both 100 Gb/s and 200 Gb/s lane speeds.”

The CEO also revealed that Lumentum had just received the largest single purchase commitment for ultra-high power lasers in its history, with the San Jose fab capacity investment critical to what is expected to be a significant revenue ramp in CPO next year.

The current boom in AI and cloud networking demand means that Lumentum’s business has skewed even more towards optical communications, which accounted for nearly 90 per cent of company revenues in the June quarter.

Industrial tech
The remaining company turnover relates to industrial lasers and 3D sensing applications, which in the latest quarter totaled $56.6 million - up 6 per cent on the same period last year.

“Ultrafast laser shipments held steady and [are] near record levels, driven primarily by strong demand from a leading tool supplier supporting high-volume solar cell manufacturing,” commented Hurlston.

The CEO added that 3D sensing, where Lumentum has previously been a key component supplier to Apple for facial security systems, would be a “minimal” part of the firm’s business in the future, and as attention turns increasingly to data centers.

Despite Lumentum’s revenues rising quickly, the company was still unable to post a profit in the latest quarter, although the pre-tax loss figure of $11.4 million was much-reduced from $128 million this time last year.

And for the company’s latest full fiscal year, which also ended June 28, pre-tax loss of $172 million was down from $406 million a year ago.

With quarterly sales revenues projected to rise to somewhere between $510 million and $540 million in the September quarter, and Lumentum’s management team “fairly confident” that its products will be exempted from the latest iteration of US import tariffs, the firm’s stock price rose in after-hours trading to around $124 on the Nasdaq.

That price represents a new record high for the stock, which has more than doubled in value since April, when the potential impact of trade tariffs was less clear.

Source: optics.org