Lumentum Holdings Inc. stock drops amid market weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 15 2026
0mins
Should l Buy LITE?
Source: Fool
Lumentum Holdings Inc. (LITE) shares fell by 5.05% in pre-market trading, crossing below the 5-day SMA, reflecting a negative sentiment in the broader market.
The decline in Lumentum's stock price comes amid a broader market downturn, with the Nasdaq-100 (QQQ) down 0.73% and the S&P 500 (SPY) down 0.42%. This sector rotation indicates that despite Lumentum's recent positive performance, the overall market conditions are impacting its stock negatively.
Investors should remain cautious as the stock's movement suggests a potential shift in market dynamics, and they may want to monitor upcoming earnings reports for further insights into the company's performance.
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Analyst Views on LITE
Wall Street analysts forecast LITE stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for LITE is 303.36 USD with a low forecast of 147.00 USD and a high forecast of 470.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
9 Buy
5 Hold
0 Sell
Moderate Buy
Current: 504.420
Low
147.00
Averages
303.36
High
470.00
Current: 504.420
Low
147.00
Averages
303.36
High
470.00
About LITE
Lumentum Holdings Inc. is a designer and manufacturer of optical and photonic products enabling optical networking and laser applications worldwide. Its segments include Cloud & Networking and Industrial Tech. The Cloud & Networking segment products include a comprehensive portfolio of optical and photonic components, modules, and subsystems supplied to cloud and communications network operators and network equipment manufacturers building cloud data center infrastructure, including products for artificial intelligence and machine learning (AI/ML) and data center interconnect (DCI) applications, and communications service provider networks, including products for access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) network infrastructure. The Industrial Tech segment products include solid-state lasers, kilowatt-class fiber lasers, diode lasers, ultrafast lasers, and gas lasers, which address applications in numerous end-markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Improved Profitability: The company's adjusted operating margin expanded by 17 percentage points to 25.2%, indicating significant improvements in profitability as operations scale, which further boosts investor confidence.
- Net Income Explosion: Lumentum's adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, well above Wall Street's estimate of $1.41, showcasing the company's competitive edge and profit potential in the market.
- Optimistic Future Outlook: The company expects revenue for the third quarter of fiscal 2026 to grow approximately 85% to between $780 million and $830 million, with projected adjusted operating margins of 30% to 31%, indicating a solid growth trajectory and strengthened market position for Lumentum going forward.
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- Improved Profitability: The adjusted operating margin expanded by 17 percentage points to 25.2%, while adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, significantly exceeding Wall Street's estimate of $1.41, reflecting effective cost control and operational scaling.
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- Critical Role in AI Market: CEO Michael Hurlston stated that Lumentum's technology is recognized as a foundational engine of the AI revolution, with virtually every AI network powered by its technology, underscoring the company's strategic importance among global AI leaders.
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- Analyst Rating Upgrades: Analyst Mike Genovese from Rosenblatt Securities raised the price target from $220 to $300, while Needham maintained a Buy rating with a $235 target, reflecting market confidence in the company's future growth.
- Capacity Expansion Plan: The company plans to increase its internal indium phosphide (InP) capacity by 100% by 2026, which will help enhance revenue and margins over the next several quarters to meet the rapid growth demands in AI and cloud computing.
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- New Product Lines Driving Growth: Significant order increases for new product lines, including optical circuit switches and co-packaged optics, are expected to accelerate delivery in C2H26 and C1H27, enhancing the company's competitive position.
- Substantial Capital Expenditure Increase: Needham raised Lumentum's price target from $470 to $550, while B. Riley Securities increased its target from $147 to $526, reflecting strong market confidence in the company's future growth potential.
- Capacity Expansion Strategy: Lumentum plans a 40% front-loaded expansion of its InP capacity in 2026 to meet surging demand for laser chips, which is expected to significantly enhance its market share.
See More
Lumentum's Quarterly Earnings Surge Drives Stock Growth
- Revenue Surge: Lumentum's revenue for the second quarter of fiscal 2026 jumped 65.5% year-over-year to $665.5 million, reflecting strong demand for its optical and photonic technologies, particularly in artificial intelligence and cloud computing systems.
- Improved Profitability: The company's adjusted operating margin expanded by 17 percentage points to 25.2%, indicating significant improvements in profitability as operations scale, which further boosts investor confidence.
- Net Income Explosion: Lumentum's adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, well above Wall Street's estimate of $1.41, showcasing the company's competitive edge and profit potential in the market.
- Optimistic Future Outlook: The company expects revenue for the third quarter of fiscal 2026 to grow approximately 85% to between $780 million and $830 million, with projected adjusted operating margins of 30% to 31%, indicating a solid growth trajectory and strengthened market position for Lumentum going forward.
See More
Lumentum Shares Surge Over 40% Following Strong Earnings Report
- Significant Revenue Growth: Lumentum's revenue surged 65.5% year-over-year to $665.5 million in its fiscal Q2 2026, demonstrating strong demand for its optical and photonic technologies, particularly in AI and cloud computing systems.
- Improved Profitability: The adjusted operating margin expanded by 17 percentage points to 25.2%, while adjusted net income skyrocketed by 380% to $143.9 million, or $1.67 per share, significantly exceeding Wall Street's estimate of $1.41, reflecting effective cost control and operational scaling.
- Optimistic Future Outlook: For fiscal Q3 2026, Lumentum expects revenue to grow approximately 85%, projecting between $780 million and $830 million, with adjusted operating margins of 30% to 31% and earnings per share between $2.15 and $2.35, indicating strong confidence in future growth.
- Critical Role in AI Market: CEO Michael Hurlston stated that Lumentum's technology is recognized as a foundational engine of the AI revolution, with virtually every AI network powered by its technology, underscoring the company's strategic importance among global AI leaders.
See More
Top Performing Large-Cap Stocks Last Week
- Lumentum Earnings Beat: Lumentum Holdings Inc. surged 36.02% this week after reporting second-quarter results that exceeded expectations and providing third-quarter guidance above analyst estimates, thereby boosting investor confidence and significantly driving up the stock price.
- Transportation Stocks Rally: Saia, Inc. jumped 23.07% this week, benefiting from declining oil prices, which led to a strong performance across the transportation sector, indicating optimistic market expectations for transportation demand that could enhance future earnings.
- Westlake Stock Increase: Westlake Corporation saw a 19.27% rise in its stock price this week, reflecting positive market sentiment regarding its business outlook, particularly in the context of declining raw material costs that may improve profitability.
- Market Recovery: The strong performance of these stocks indicates a growing investor confidence in economic recovery, especially amid falling oil prices, which could further drive growth in related industries.
See More
Coherent Corp Reports Strong Quarterly Results Amid Analyst Upgrades
- Revenue Growth: Coherent Corp reported quarterly revenue of $1.69 billion, an 18% year-over-year increase and a 7% sequential rise, surpassing the market expectation of $1.64 billion, indicating strong market performance.
- Profitability Improvement: The non-GAAP earnings per share came in at $1.29, exceeding the consensus estimate of $1.21, demonstrating significant progress in cost control and operational efficiency.
- Analyst Rating Upgrades: Analyst Mike Genovese from Rosenblatt Securities raised the price target from $220 to $300, while Needham maintained a Buy rating with a $235 target, reflecting market confidence in the company's future growth.
- Capacity Expansion Plan: The company plans to increase its internal indium phosphide (InP) capacity by 100% by 2026, which will help enhance revenue and margins over the next several quarters to meet the rapid growth demands in AI and cloud computing.
See More
US Stocks Waver Amid Mixed Earnings and Tech Rotation
- Market Fluctuations: The S&P 500 Index is up 0.08%, the Dow Jones Industrial Average is up 0.54%, while the Nasdaq 100 Index is down 0.56%, indicating the complexity of market sentiment amid mixed corporate earnings results.
- Divergent Corporate Performance: Super Micro Computer forecasts Q3 net sales of at least $12.3 billion, significantly above the $10.25 billion consensus, leading to a stock price increase of over 15%; conversely, Advanced Micro Devices' weak Q1 sales forecast results in a stock decline of over 13%, reflecting a reassessment of tech stocks.
- Labor Market Signals: The January ADP employment change rose by 22,000, below the expected 45,000, indicating weakness in the labor market that could influence future monetary policy decisions.
- Government Funding Plan: The funding package signed by President Trump extends funding for the Department of Homeland Security through February 13, while other departments are funded until September 30, alleviating concerns over a government shutdown and boosting investor confidence.
See More
Lumentum's Q2 Results Surge as AI Demand Drives Growth
- Surge in AI Infrastructure Demand: Lumentum's Q2 fiscal 2026 results indicate that the unprecedented demand for AI network infrastructure is a key long-term growth driver, with analysts projecting continued benefits from this trend.
- New Product Lines Driving Growth: Significant order increases for new product lines, including optical circuit switches and co-packaged optics, are expected to accelerate delivery in C2H26 and C1H27, enhancing the company's competitive position.
- Substantial Capital Expenditure Increase: Needham raised Lumentum's price target from $470 to $550, while B. Riley Securities increased its target from $147 to $526, reflecting strong market confidence in the company's future growth potential.
- Capacity Expansion Strategy: Lumentum plans a 40% front-loaded expansion of its InP capacity in 2026 to meet surging demand for laser chips, which is expected to significantly enhance its market share.
See More
