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05 Nov 2025
Photonics firm swings to a net profit as AI data center momentum continues.
Lumentum, the California-headquartered maker of photonics products for optical communications and industrial applications, has posted record sales revenues in its latest quarter, as the boom in demand for AI-related infrastructure shows little sign of abating.
At $533 million, the latest sales total was up around 60 per cent year-on-year but in line with prior guidance, and according to CEO Michael Hurlston represented the highest figure in the San Jose firm’s ten-year history - by a wide margin.
“Our growth is powered by AI demand spanning our laser chips and optical transceivers inside data centers, as well as the interconnected long-haul networks that link them,” he told an investor conference call.
“In fact, we estimate that over 60 per cent of our total company revenue now comes from cloud and AI infrastructure, driven both directly by hyperscale customers and indirectly through network equipment and optical transceiver manufacturers that embed Lumentum components in their solutions.”
The sharp uptick saw Lumentum swing to a pre-tax income of $5 million - compared with a loss of nearly $80 million this time last year.
Live from Copenhagen, #ECOC2025 is officially underway! @Lumentum is proud to showcase how we leverage #photonics to power #AI-ready networks at this year's @ECOC_Exhibition.
— Lumentum (@Lumentum) September 30, 2025
📅 Sept. 29 – Oct. 1, 2025
📍 Bella Center | Hall C, Stand C2421
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Components and systems
While some influential commentators have recently started to voice skepticism about the sustainability of the AI data center boom, Lumentum’s order book shows no indication of a slow-down, with sales expected to rise by another 20 per cent in the closing quarter of 2025.
Hurlston pointed out that just three months ago he and his executive team said that they thought Lumentum’s quarterly revenues could top $600 million by June 2026.
Now it looks like that milestone will be hit way ahead of schedule, with sales currently expected to be anywhere between $630 million and $670 million in the December quarter.
Hurlston is expecting strong further growth beyond that too, telling investors: “We have identified three major drivers of future growth: cloud transceivers, optical circuit switches, and co-packaged optics.”
Meaningful contributions from optical circuit switches and co-packaged optics (CPO) are not expected before 2026, although for cloud transceivers sustained growth is expected to resume imminently and accelerate for the next few quarters.
Lumentum has updated the way that it reports its financial results, now splitting the figures into sales of components and systems. Components includes laser chips, laser sub-assemblies, line subsystems, and wavelength management subsystems, while systems includes optical transceivers, optical circuit switches, and industrial lasers.
Under those definitions, component sales in the latest quarter were up 64 per cent year-on-year, to $379 million, with system sales rising 47 per cent, to $155 million.
CPO adoption grows
The only area currently witnessing soft demand at the moment appears to be industrial lasers, which Hurlston said reflected general weakness in the industrial segment.
But offsetting that is Lumentum’s recent heavy investment in indium phosphide (InP) chip production, which will add an estimated 40 per cent capacity over the next couple of quarters.
The CEO said that the vast majority of that InP output will be sold into the external market rather than deployed inside Lumentum’s own systems, with that external demand said to “far exceed” current supply, even with the firm’s capacity expansion.
The extra capacity largely relates to laser chips, with Lumentum looking to allocate production preferentially to the highest dollar value and highest margin components - notably 200 Gb/s externally modulated lasers.
Regarding CPO, Hurlston indicated that current demand was stronger than Lumentum had previously expected, with shipments set to ramp up in the second half of 2026.
“We’re getting engaged now, not only with the primary customer that’s launching their switch product and really taking advantage of CPO, but other customers as well,” said the CEO, with Wupen Yuen, president of Lumentum’s global business units, adding:
“We feel that the demand and the interest has really increased in the last quarter. We are more optimistic than last quarter on the general or industry-wide adoption of the CPO solution, including our lasers.”
• Immediately following the firm’s latest update, Lumentum’s stock price rose in value by around 15 per cent, to $218 on the Nasdaq. That latest uptick means that the company’s valuation has near-trebled over the past 12 months, with Lumentum’s market capitalization now standing at more than $15 billion.
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