Will Nasdaq-100 entry and AI data center momentum change the investment case for Lumentum (LITE)?

• In May 2026, Lumentum Holdings Inc. was added to the Nasdaq 100 Index. This matched record results in Q3 2026, driven by demand for the company’s optical and photonics products in AI data centers and cloud networking.
• At the same time, the launch of the 2X Leveraged ETF associated with Lumentum and a multibillion-dollar NVIDIA investment highlighted the company’s growing role in AI infrastructure and investors’ efforts to expand exposure to the theme.
• Here, we consider how Lumentum’s inclusion in the Nasdaq-100 and enhanced AI data center positioning could impact its existing investment story.

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Lumentum Holdings Investment Story Summary

To own Lumentum, you need to believe that its role in the optics of the AI ​​data center will remain central even as hyperscalers scale out capacity. Inclusion in the Nasdaq 100 and related trading products may increase visibility and liquidity, but it does not fundamentally change the key near-term drivers of cloud and AI capacity ramp execution, or the biggest risk that revenue remains concentrated among a small number of hyperscale customers.

The most relevant update here is the US$2 billion NVIDIA investment related to long-term optical supplies and new manufacturing in the US. This strengthens Lumentum’s AI infrastructure footprint and supports the thesis that capacity expansion is critical to capturing demand for advanced EML, transceivers, and optical switches, while also increasing risk when supply chain execution and customer concentration become an issue.

But despite AI’s strong story, investors still need to be aware that concentrating so much growth in a handful of hyperscale buyers could:

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The Lumentum Holdings story projects sales of $9.3 billion and profits of $2.9 billion by 2029.

We reveal how Lumentum Holdings’ forecasts generate a fair value of $904.89, which is 4% lower than the current price.

explore other perspectives

Some of the most optimistic analysts are already predicting sales of around USD 10.9 billion and profits of USD 4.1 billion by 2029, so we can see how their view on hyperscaler demand and capacity constraints is much more optimistic than the consensus, and how the latest news about index inclusion and AI deals may confirm or call into question those assumptions over time.

Check out 9 other fair value estimates for Lumentum Holdings – find out why the stock is worth less than half its current price!

The verdict is yours

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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