Lumentum Holdings Inc (NASDAQ:LITE) reported fiscal fourth-quarter results above Wall Street expectations, supported by strong artificial intelligence-related demand for optical connectivity used in data centres.
Adjusted earnings per share came in at $3.23, beating the analyst estimate of $2.95 by $0.28. Revenue reached $1.01 billion, ahead of the $984.57 million consensus forecast and up 109% from $480.7 million in the same period a year earlier.
First-quarter guidance exceeds expectations
For the first quarter of fiscal 2027, Lumentum forecast revenue of between $1.225 billion and $1.275 billion. The midpoint of $1.25 billion was above the analyst consensus of $1.16 billion.
The company also guided for adjusted earnings per share of $4.05 to $4.35. The midpoint of $4.20 exceeded the $3.63 consensus estimate.
Lumentum said the stronger outlook reflected growing AI-driven demand for optical links in data centres.
The shares rose around 8% in premarket trading on Wednesday by 04:10 ET (08:10 GMT), extending a year-to-date gain of more than 122%.
“As AI compute workloads increase in both speed and bandwidth, data center architects are turning to optical links as a primary means of connectivity,” said President and CEO Michael Hurlston. “Looking ahead, our trajectory continues to accelerate as AI demand drives our Q1 revenue guidance midpoint to $1.25 billion, reaching our target model more than a quarter ahead of schedule.”
Margins expand sharply
Adjusted gross margin increased to 50.4% in the fiscal fourth quarter from 37.8% a year earlier, while adjusted operating margin climbed to 36.6% from 15.0%.
Components revenue rose 103% year on year to $649.4 million, while systems revenue increased 123% to $356.9 million.
Lumentum ended the quarter with $2.7 billion in cash, cash equivalents and short-term investments. For the first quarter of fiscal 2027, the company expects adjusted operating margin of between 39.5% and 40.5%.
Raymond James raises price target
Raymond James analysts maintained their Outperform rating on Lumentum and lifted their price target to $1,036 from $1,014 following the results.
“Management addressed investor concerns including CPO/NPO timing, new competition, gross margin trends, and the OCS trajectory—we liked the responses, but suspect overhang lingers,” the analysts wrote.
Lumentum stock price
