Lumentum (LITE) Stock Surges on AI Demand and Strong Q2 Results

TLDR

• Lumentum (LITE) stock rose ~5% on Friday, building on Thursday’s gains after a bullish Power Inflow signal triggered at $650.65 on February 20.
• Q2 fiscal revenue came in at $665.5 million, with Q3 guidance of $780–$830 million and projected EPS of $2.15–$2.35.
• CEO Michael Hurlston flagged over 85% year-over-year revenue growth, with optical circuit switch backlog exceeding $400 million.
• A convertible notes disclosure raised a “substantial doubt” about the company’s ability to continue as a going concern under certain conditions.
• Lumentum has key investor events scheduled for February 26, March 2, and March 17, all closely watched for demand updates.

Lumentum Holdings (LITE) has had a strong couple of days. The stock climbed roughly 5% on Friday, February 21, following gains on Thursday, pushing it to new highs heading into the weekend close.

Lumentum Holdings Inc., LITE

The move came off the back of a bullish trading signal on February 20. At 10:16 AM EST, LITE triggered a Power Inflow alert at $650.65. The signal tracks a shift in order flow toward buying activity from both retail and institutional traders.

After the alert, the stock climbed to an intraday high of $678 by 2:00 PM EST — a gain of around 4.2% from the signal price.

LITE wasn’t alone. Other optical networking stocks also had a strong Friday. Coherent climbed roughly 7%, Fabrinet gained close to 6%, Applied Optoelectronics surged around 10%, and Ciena rose about 5%.

Strong Q2 Numbers Drive Momentum

The broader rally has roots in Lumentum’s Q2 fiscal results, released February 3. Revenue came in at $665.5 million, and the company guided Q3 sales between $780 million and $830 million.

Non-GAAP EPS for Q3 is expected to land between $2.15 and $2.35, excluding stock-based compensation and certain one-time items.

The key driver is demand for optical circuit switches — the hardware that routes data inside large data centers. The backlog for these switches has reportedly topped $400 million.

Lumentum also secured an “incremental multi-hundred-million-dollar order” for co-packaged optics, with delivery scheduled for the first half of calendar 2027.

Risks Lurking Beneath the Surface

Not everything is clean. A recent quarterly filing flagged a potential concern around convertible notes. The document said that conversion rights “raise a substantial doubt” about the company’s ability to continue as a going concern if a large number of holders convert simultaneously.

That kind of language in a filing tends to get attention, and it has. Analysts and investors are watching closely.

There’s also the question of cloud client spending. Any delays in network upgrades or order pushbacks from major customers could hit revenue. It’s a real risk in a market where spending decisions can shift quickly.

Management’s comments at upcoming investor events will be under the microscope. On February 26, Lumentum attends the Susquehanna annual technology event. On March 2, the company presents at the Morgan Stanley Technology, Media & Telecom conference at 11:30 AM Pacific, with a live webcast available.

On March 17, Lumentum holds an investor briefing at the Optical Fiber Communication Conference (OFC) in Los Angeles — an event known for moving sentiment around optical suppliers.

Investors will be looking specifically for updates on the order book and backlog to see if the clarity from the February 3 announcement holds.

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