Lumentum stock LITE rallied on Wednesday as optical networking shares rebounded from a sharp artificial intelligence-related selloff earlier in the week.
The stock gained 8% in trading to $906.76.
The move made Lumentum the best-performing stock in the S&P 500 during the session.
The rebound came as investors focused on the company’s position in optical networking and its exposure to growing data-centre connectivity demand.
Lumentum leads optical networking rebound
Lumentum’s gains came alongside a broader recovery among optical networking stocks. Coherent shares rose 6.1% to $287.99 in midday trading, while Corning gained 1.6% to $145.89.
The three companies have been affected by swings in sentiment towards artificial intelligence.
Optical networking companies have become an important part of the AI trade as data-centre construction has increased demand for fibre-optic cables used to move data.
That exposure has also left the sector vulnerable when investor sentiment towards AI weakens.
Corning was the biggest decliner in the S&P 500 on Monday after Elon Musk, OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei called for a slowdown in AI development.
Corning remained about 12% lower for the week on Wednesday and was trading slightly below its 200-day moving average.
Lumentum and Coherent have experienced smaller weekly declines, with the two stocks down 2.5% and 5.4%, respectively, for the week despite their midweek rebounds.
Analysts raise expectations for Lumentum
Several analysts have recently highlighted Lumentum’s position in the optical networking market.
Deutsche Bank initiated coverage of Lumentum with a Buy rating and a $1,200 price target. The bank described the company’s III-V lasers as a critical component of future optical networks.
Evercore ISI also began coverage with an Outperform rating and a $1,100 price target, describing Lumentum as a potential “picks and shovels” play on connectivity bottlenecks involving AI accelerators.
Rothschild & Co Redburn raised its price target to $1,294.85 while maintaining a Buy rating.
According to TipRanks data, 13 of the 17 analysts covering Lumentum have a Buy rating, while four have a Hold rating.
The Street’s average price target was around $1,107, compared with Lumentum’s current price of about $906.
ECOC 2026 puts optical technology in focus
Lumentum’s latest rally also coincided with its presence at ECOC 2026, the European Conference on Optical Communications.
The company is presenting live technology and product demonstrations at the event, highlighting its role in AI-driven data-centre connectivity and advanced optical networking.
Lumentum’s CEO has also raised the company’s long-term guidance, citing an increase in orders and targeting roughly $40 eps by fiscal 2028 as demand shifts towards higher-margin optical products.
Meanwhile, Corning’s weaker performance may also reflect company-specific factors.
The company disclosed an equity distribution agreement with Goldman Sachs late Friday to issue up to $2 billion of new stock.
Mizuho Securities said the plan appeared intended to generate cash as Corning works to complete major projects.
The developments leave Lumentum shares closely tied to both AI investment sentiment and demand for optical infrastructure.
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