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Lumentum (LITE) is rallying today, lifting optical networking peers Applied Optoelectronics (AAOI) and Coherent (COHR) after CEO Michael Hurlston told Bloomberg that its optical component capacity is completely sold out through early 2029. The comments are helping the group rebound from yesterday's selloff, which followed a Financial Times report that OpenAI's annualized revenue was running roughly $20 bln below previously indicated figures. However, subsequent reporting suggests the discrepancy was largely tied to differences in revenue accounting rather than deteriorating demand.

• LITE's Q4 (Jun) results back in August highlighted the strength of AI infrastructure demand, with revenue surging 109% yr/yr to $1.01 bln, marking its third consecutive quarter of over 20% sequential growth. Non-GAAP gross margin also reached 50.4%, well ahead of its original target.
• The company continues to benefit from increasing optical connectivity requirements as AI clusters expand. LITE began shipping 1.6T transceivers in Q4, with adoption expected to accelerate through 2027. Optical circuit switching (OCS) shipments also doubled sequentially, with management expecting its first $100 mln-plus OCS revenue quarter in Q1 (Sep).
• AAOI is experiencing similarly robust demand, with its FY26 revenue outlook of around $1.1 bln implying roughly 141% growth from $455.7 mln in FY25. Management expects demand for 800G and 1.6T transceivers to exceed production capacity through mid-2027, with supply constraints limiting near-term growth.
• COHR also highlighted exceptional demand and order visibility, with Q4 datacenter revenue jumping 66% yr/yr and its 1.6T transceiver ramp progressing faster than expected. Its backlog is essentially filled through 2027, with purchase orders extending into 2028 and long-term customer agreements extending through the decade. Management expects quarterly revenue to surpass $3 bln by the end of FY27 (Jun).

Briefing.com Analyst Insight

Overall, LITE's CEO comments are driving a sharp rebound after yesterday's selloff, reinforcing the robust demand environment across optical networking peers. However, yesterday's weakness also highlights how sensitive the group remains to broader concerns around AI spending and monetization. With demand for key optical products continuing to outpace available capacity, execution will be increasingly important as companies invest heavily in manufacturing expansion, navigate supply chain constraints, and work to ramp production to meet customer demand while maintaining profitability.