Lumentum (LITE) posted quarterly results that topped market expectations and used its earnings call to give a clearer timeline for co-packaged optics production, a combination that drew attention across the optical communications supply chain. The company said demand tied to artificial intelligence infrastructure, especially for 1.6T optical transceivers and 200G electro-absorption modulated laser, or EML, chips, drove both revenue and earnings above consensus while lifting margin performance to a new high.
Revenue reached $1.01 billion and adjusted gross margin climbed to 50.4%
Lumentum reported quarterly revenue of $1.01 billion, up 109% from a year earlier and above the market estimate of $988 million. Non-GAAP earnings per share came in at $3.23, ahead of the expected $2.97.
The company said the richer mix of higher-end products helped push adjusted gross margin to 50.4%, allowing it to reach its 50% operating milestone earlier than planned. Lumentum tied that performance to rapid volume growth in 1.6T optical transceivers and ultra-high-power lasers.
Its guidance for the next quarter also came in well above Wall Street consensus. Lumentum projected midpoint revenue of $1.25 billion and forecast non-GAAP EPS in a range of $4.05 to $4.35.
CPO and first ELS deliveries are slated for the second half of 2027
On CPO, the issue most closely watched by the market, management said on the earnings call that volume demand from a lead customer for ultra-high-power laser chips, along with procurement and delivery of the first external light source, or ELS, modules, is scheduled for the second half of calendar 2027.
That disclosure addressed earlier market talk that CPO adoption had been delayed. The company also said demand for 1.6T optical transceivers is expected to expand from the first quarter of 2027 and continue through year-end. It added that new architectures such as near-packaged optics, or NPO, are increasing total addressable market potential for optical products.
Ultra-high-power CW laser shortage supports pricing
As AI modules move up the performance curve, Lumentum said ultra-high-power continuous-wave, or CW, lasers are facing a severe supply-demand imbalance. Management said shipment growth is still lagging customer demand growth by a wide margin, and that tight capacity has given the company room to maintain premium pricing.
Asked about competition from China, Lumentum said Chinese suppliers’ actual output and technology progress are behind what the market had expected, leaving them unable in the near term to pose a material threat to Western CW laser vendors.
InP substrate supply remains a bottleneck
To address the gap in supply for ultra-high-power CW lasers and EML chips, Lumentum said it is working to secure stable access to indium phosphide, or InP, substrates and has sought additional capacity support from key partners including AXTI.
ABMedia’s report also said NVIDIA invested $2 billion in March 2026 to support Lumentum’s North Carolina expansion for AI-critical optical components, with further volume growth expected in 2028.
Taiwan optical and CPO-related stocks moved higher
Lumentum’s capacity expansion plan and firmer CPO commercialization schedule were seen as supportive for upstream epitaxy manufacturing and optical packaging names in Taiwan. The report said suppliers such as LandMark could benefit from stronger demand for 200G EML and ultra-high-power CW lasers, while partners such as Phion and HwaCom play roles in dense fiber array integration and silicon photonics component packaging.
As global suppliers ramp, penetration by Taiwanese companies in the CPO ecosystem is expected to rise as well. In trading, HwaCom (4979) hit limit-up shortly after the open, while LandMark (3081) and Phion (3363) each gained close to 5%.