The Speed of Light: Lumentum's Role in the AI Buildout

The AI infrastructure race is entering a new phase. As increasingly powerful GPUs are assembled into larger clusters, the ability to move enormous volumes of data between processors, servers and data centers is becoming as important as the compute itself. At that scale, traditional copper interconnects face growing limitations in speed, distance and power efficiency, elevating the role of optical networking within the AI infrastructure stack.

That shift has made Lumentum Holdings (LITE) increasingly important to one of AI’s most significant infrastructure transitions. A specialist in optical and photonic technologies, Lumentum supplies the lasers, transceivers and optical switching technologies that allow data to move at high speeds across increasingly complex AI systems. Its recent growth, expanding order pipeline and strategic relationship with NVIDIA illustrate how rapidly demand for this physical layer of AI infrastructure is developing.

For the ROBO Global Artificial Intelligence ETF (THNQ), Lumentum (holding as of 9/10/26) may provide exposure to a critical component of the AI buildout and to an infrastructure requirement that could become increasingly important as the scale and complexity of AI systems continue to grow.

A Partnership That Redefined the Opportunity

A major validation of that opportunity arrived in March 2026, when NVIDIA announced a multiyear strategic partnership with Lumentum and a $2 billion investment in the company. The capital is intended to support R&D, expand manufacturing capacity and help establish a new U.S.-based fabrication facility.¹ The agreement also includes a multibillion-dollar purchase commitment and future capacity access rights for advanced laser components.¹

NVIDIA CEO Jensen Huang described optical interconnect technology as “critical for the continued scaling of AI factories,”¹ underscoring the growing strategic importance of photonics as AI infrastructure expands.

NVIDIA simultaneously announced an equal $2 billion commitment to another major optical technology provider.² Taken together, the investments provide a powerful signal: securing sufficient optical capacity has become a strategic consideration for the companies building AI infrastructure.

Lumentum’s growing prominence was reinforced two months later. On May 18, 2026, the company joined the Nasdaq-100, replacing CoStar Group.³ CEO Michael Hurlston described the inclusion as a reflection of “deep market confidence in our ability to scale the physical layer of the internet.”⁴ The milestone reflects how dramatically Lumentum’s position has evolved as AI-driven demand has accelerated across its markets.

Growth Continues Along the AI Buildout

That changing role is increasingly visible in Lumentum’s financial results. Fiscal third-quarter revenue increased 90% year over year to $808 million.⁵ Fiscal Q4, reported August 12, 2026, accelerated further, with revenue reaching $1.01 billion - up 109% year over year and 24% sequentially, ahead of Street estimates of approximately $988 million.⁶

Adjusted EPS (earnings per share) reached $3.23, more than tripling year over year, while non-GAAP gross margin* expanded to 50.4%.⁹ The quarter also pushed Lumentum beyond a $2 billion quarterly run-rate threshold, a milestone Hurlston noted arrived “quite a bit sooner than expectations.”⁶

The market response has been significant. LITE shares gained roughly 14% following the fiscal Q4 report, extending a move from approximately $602 in late July into the mid-$900s by mid-August.10 Over the trailing year, the shares have risen more than 700%, reflecting growing investor expectations around Lumentum’s role in the AI infrastructure cycle.⁷

Past performance does not guarantee future results.

Multiple Growth Engines Are Taking Shape

Importantly, Lumentum’s opportunity extends across several parts of the optical networking architecture. Its optical circuit switch (OCS) backlog has surpassed $400 million, with management guiding toward its first quarter of triple-digit OCS revenue in fiscal Q1 2027.⁸ Optical circuit switching can help AI clusters dynamically route enormous volumes of data while reducing power consumption and latency, capabilities that become increasingly valuable as clusters grow larger and more complex.

Lumentum has also booked a multi-hundred-million-dollar co-packaged optics order for delivery during the first half of calendar 2027.⁸ Co-packaged optics moves optical connections closer to the processor, potentially addressing some of the bandwidth and power challenges created as AI systems grow larger.

At the same time, 1.6T transceivers are ramping into production as hyperscalers begin upgrading AI clusters from 800G networking.⁸ The progression from 800G to 1.6T (and eventually higher speed architectures) creates the potential for successive technology upgrade cycles as the amount of data moving through AI infrastructure continues to increase.

Together, these businesses give Lumentum exposure across multiple layers of the transition toward faster, more power-efficient AI networking.

The Lumentum Opportunity Within THNQ

The AI investment landscape is broadening as the infrastructure required to support increasingly sophisticated models becomes more complex. GPUs remain central to the buildout, but their value depends increasingly on the networks capable of connecting thousands and eventually potentially millions of processors into functioning AI systems. Lumentum sits directly within that connectivity layer. Its optical technologies help address the bandwidth, latency and power requirements created as AI clusters increase in size and density.

NVIDIA’s $2 billion investment adds another dimension. The partnership pairs one of the largest beneficiaries of AI compute demand with a supplier whose technology NVIDIA has identified as important to scaling future AI factories, while providing Lumentum with capital to expand the manufacturing capacity needed to meet that demand.

For THNQ, Lumentum illustrates the breadth of the AI opportunity that may be captured within the portfolio. As investment moves through the AI technology stack, from semiconductors and compute to networking, optics and supporting infrastructure, the companies addressing critical constraints on that growth could play an increasingly important role.

The next phase of AI will depend as much on moving data as on processing it. Lumentum sells the technology that moves it.

Holdings subject to change. To view holdings click here.

* Non-GAAP gross margin is an adjusted measure of profitability that excludes certain expenses from standard cost calculations.

Sources

1. Lumentum Holdings Inc., "NVIDIA Announces Strategic Partnership With Lumentum to Develop State-of-the-Art Optics Technology," news release, March 2, 2026.

2. CNBC, "Nvidia to Invest $4 Billion Into Photonics Companies Coherent and Lumentum," March 2, 2026.

3. Nasdaq, "Lumentum Holdings Inc. to Join the Nasdaq-100 Index® Beginning May 18, 2026," press release, May 8, 2026.

4. Lumentum Holdings Inc., "Lumentum Joins the Nasdaq-100 Index®, Achieving New Milestone in Global Growth," news release, May 11, 2026.

5. Let's Data Science, "Nvidia Invests $2B in Lumentum for AI Optics," May 12, 2026, (citing Seeking Alpha reporting on Lumentum's fiscal Q3 2026 results).

6. Tikr, "Lumentum Stock Jumped 14% on a Blowout Quarter. The Street's Targets Are Still Playing Catch-Up," August 2026.

7. StocksToTrade, "LITE Stock Jumps As AI Demand Fuels Blowout Quarter," August 12, 2026.

8. 24/7 Wall St., "24/7 Wall St.'s Lumentum Recommendation Is Up More Than 1000%. Here's Why the Stock Can Keep Rallying," August 17, 2026.

9. Lumentum Holdings Inc., "Lumentum Announces Fourth Quarter and Full Fiscal Year 2026 Results," news release, August 11, 2026.

10. Tim Sykes, "LITE Stock Jumps As Earnings Beat Fuels AI-Driven Momentum," Timothy Sykes, August 26, 2026.