Evercore ISI analyst Amit Daryanani reiterated an Outperform rating and $1,100.00 price target on Lumentum (NASDAQ: LITE)

The analyst comments "Last night, LITE’s CEO Michael Hurlston told Bloomberg that optical components for AI servers are “completely sold out” through early 2029, extending the visibility discussed earlier this year through 2028. We view this as a positive reinforcement of the AI optics thesis, with the debate increasingly centered on how quickly LITE can convert demand into shipments rather than the availability of demand. Three key takeaways: 1) Demand Outrunning Supply: Hurlston said LITE cannot meet ~70% of demand for certain products through 2027 and ~30% for other products through 2028, while customers are already starting to lock in orders for 2030. We think this strengthens the multiyear growth runway and suggests the durability of demand is strengthening. 2) Capacity Execution Drives Upside: Bloomberg noted that building new production capacity takes three to five years for companies like LITE, underscoring the difficulty of closing the supply gap quickly. LITE previously outlined >50% y/y EML unit growth by the December 2026 quarter, alongside expansion across its two Japanese InP fabs; Greensboro remains targeted for first revenue in early 2028, ramping through 2028 into 2029. In our view, these long lead times support sustained supply tightness and pricing power, while shipment upside still depends on capacity execution, yields and qualification timing. 3) M&A Could Broaden The Opportunity: Hurlston said expanding the product lineup would require an acquisition: “I think probably in the next year, we'd like to add additional capability to what we currently have.” We view this as a potential portfolio catalyst rather than an announced transaction. Net/Net: We think Hurlston’s comments provide another data point suggesting LITE has a multiyear runway for growth ahead, as optics remains a key component of the AI buildout."

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Shares of Lumentum closed at $1048.60 yesterday.