Shares of Micron Technology and Sandisk have clocked phenomenal returns over the past year, primarily due to the mission-critical role of the memory chips produced by them for running artificial intelligence (AI) workloads in data centers. Faster memory chips and larger storage help solve a key bottleneck in AI data centers by enabling the rapid transport of large volumes of data to data center accelerators. As a result, accelerator chips, such as graphics cards and custom processors, don't have to sit idle and waste energy.
However, a closer look at the AI infrastructure ecosystem makes it clear that memory isn't the only bottleneck impeding accelerator performance. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » The rapid transport of data has created an incredible demand for optical networking components, which use light to quickly transmit massive amounts of data over long distances via fiber-optic cables. Investment banking and brokerage firm Rosenblatt Securities estimates that optical component companies could increase production capacity by 12x between 2025 and 2030.
However, even that won't be enough to meet the booming demand for optical components. Rosenblatt predicts that supply will trail demand by 50% in 2030 despite the massive increase in production through the end of the decade. This explains why optical and photonics components supplier Lumentum Holdings (NASDAQ: LITE) has been experiencing incredible growth in revenue and earnings.
The company released its fiscal 2026 fourth-quarter results (for the three months ended June 27) on Aug. 11, and its shares popped more than 13% the following day. Lumentum easily crushed analysts' expectations, and its guidance makes it clear that the company's red-hot growth momentum is sustainable. Lumentum's revenue shot up by 109% year over year to just over $1 billion in fiscal Q4, exceeding the $988 million consensus estimate.
Its bottom-line growth, however, was the icing on the cake. Lumentum's non-GAAP operating margin increased by 21.6 percentage points year over year in fiscal Q4 to 36.6%. As a result, the company's adjusted earnings per share rose almost 3.7x year over year to $3.23, exceeding the consensus estimate of $2.97.
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