What Makes Lumentum Holdings (LITE) a High-Growth Business?

Fidelity Investments, an investment management company, recently released its “Fidelity Growth Strategies Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fidelity Growth Strategy is a diversified equity strategy aimed at domestic midcap growth stocks. The approach focuses on identifying quality companies that deliver steady above-average growth and can outperform over time. The Fund (Retail Class shares) returned -3.44% in the quarter compared to the benchmark Russell Midcap® Growth Index’s -3.70% return. In Q4, the U.S. stock market continued its rapid rebound, driven by robust corporate fundamentals and strong spending on artificial intelligence. Mid-cap growth stocks underperformed, while large-cap stocks gained mainly from a narrow group of companies connected to generative AI, and small-cap equities benefited from interest rate sensitivity. As 2026 begins, the firm believes the business cycles in the U.S. and globally remain positive. The Strategy remains focused on companies possessing durable competitive advantages and growth potential. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Fidelity Growth Strategies Fund highlighted stocks like Lumentum Holdings Inc. (NASDAQ:LITE). Lumentum Holdings Inc. (NASDAQ:LITE) is an optical and photonic products manufacturing company and a significant contributor to the fund’s performance in the quarter. On February 4, 2026, Lumentum Holdings Inc. (NASDAQ:LITE) stock closed at $465.54 per share. Lumentum Holdings Inc. (NASDAQ:LITE) delivered a 33.68% return in the past month, and its shares are up 402.36% over the past twelve months. Lumentum Holdings Inc. (NASDAQ:LITE) has a market capitalization of $33.24 billion.

Fidelity Growth Strategies Fund stated the following regarding Lumentum Holdings Inc. (NASDAQ:LITE) in its fourth quarter 2025 investor letter:

An overweight in Lumentum Holdings (+127%), a provider of optical and photonic components used in high-speed communications applications, also helped. In early November, the company reported better-than-expected quarterly earnings, with results especially strong in its Cloud & Networking segment, which represents about 80% of the business. We increased the position during the past three months.

Lumentum Holdings Inc. (NASDAQ:LITE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 69 hedge fund portfolios held Lumentum Holdings Inc. (NASDAQ:LITE) at the end of the third quarter, up from 59 in the previous quarter. Lumentum Holdings Inc. (NASDAQ:LITE) achieved a remarkable 65% surge in revenue in the second quarter of fiscal 2026. While we acknowledge the potential of Lumentum Holdings Inc. (NASDAQ:LITE) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Lumentum Holdings Inc. (NASDAQ:LITE) and shared a list of stocks outperforming the market in February. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.