Lumentum (LITE.US), identified as a critical participant in the Google TPU AI compute chain and an essential optical components and transceiver module supplier for the NVIDIA and AMD AI GPU compute chains, is scheduled to become a constituent of the Nasdaq 100 index. It will replace CoStar Group (CSGP.US), with the change effective before market open on Monday, May 18, 2026. This development serves as a significant positive catalyst for Lumentum, a stock that has surged 145% year-to-date and skyrocketed 345% in 2025, and for the broader "Stand in the Light" investment theme gaining traction in global equity markets. This theme centers on the investment boom in data center optical interconnect and optical communication supply chains.
An increasing number of Wall Street institutions are bullish on Lumentum's prospects for continuing its strong 2025 bull market trajectory. The company's 340% gain in 2025 solidified its status as a premier AI compute theme stock globally, and its impressive 145% surge this year demonstrates sustained momentum. The core investment thesis for Lumentum's exceptional performance lies in its dual-benefit position from both the Google TPU AI compute ecosystem and the NVIDIA-led AI GPU compute ecosystem. Future AI compute infrastructure clusters, whether based on NVIDIA GPUs or Google TPUs (representing the AI ASIC technology path), will fundamentally rely on the optical interconnect and CPO (Co-Packaged Optics) silicon photonics high-speed interconnect capabilities that Lumentum provides.
Lumentum's inclusion in the Nasdaq 100 index, widely regarded as a bellwether for global technology stocks, is an extremely important positive catalyst for the company's fundamental outlook and the investment prospects of the optical interconnect industry. The index inclusion formally elevates Lumentum from a niche AI data center optical interconnect supply chain play into the pool of core global technology assets. It also signals that the dominant AI compute investment narrative is accelerating its shift from a "competition focused on singular AI GPU/ASIC compute power" toward "full-stack AI systems driven by AI agents." In this narrative shift, data center CPUs, memory chips, and the optical interconnect supply chain are poised to be among the biggest beneficiaries. Lumentum is positioned to capture the full红利 of AI infrastructure buildout, capable of sustaining its bull run regardless of whether the NVIDIA GPU or Google TPU technology path gains dominance.
AI superclusters, such as those built with TPUs or GPUs, share a core requirement: the need for extremely high bandwidth, ultra-low latency, and high energy efficiency for internal data center interconnects. Traditional copper cabling or electronic switching solutions become inadequate when scaling to thousands or even tens of thousands of chips due to explosive growth in power consumption and heat dissipation. Optical interconnect technologies—including CPO, silicon photonic switches, and Optical Circuit Switching (OCS)—replace electrical signals with light, significantly enhancing bandwidth density and energy efficiency while reducing latency and power consumption in large-scale AI training/inference networks. This demand for higher optical interconnect capacity is common to both GPU and TPU clusters.
For instance, NVIDIA's silicon photonic network switches, like Spectrum‑X/Quantum‑X, explicitly integrate laser and photonic technologies to improve power efficiency and network capacity, with Lumentum's high-performance lasers and optical components being indispensable parts. Google has already integrated OCS clusters into its Jupiter/AI data center network architecture on a large scale to support its TPU AI systems and massive training/inference systems. Lumentum's OCS products, such as the R300/R64, are specifically designed for "large-scale cloud computing and AI/ML data center networks": they use MEMS optical paths to establish direct light connections between endpoints, bypassing intermediate electronic switching and OEO conversion, emphasizing high port count, low latency, and low power consumption.
Looking ahead, particularly within NVIDIA's AI GPU compute clusters, Lumentum is likely to become a primary beneficiary across core optical interconnect segments like UHP lasers, ELS, CPO, and OCS, thanks to securing substantial investment from NVIDIA and establishing long-term capacity and new R&D pathway agreements. Lumentum is highly likely to emerge as a "key arms supplier" in the coming AI optical interconnect wave, especially critical for the NVIDIA GPU supply chain.
Lumentum is a manufacturer of critical optical communication components (lasers, optical device supplier) and also ships some transceiver modules and subsystems. However, its core technological advantage lies in its unique ability to build foundational light source and high-speed optical component platforms. These components are extensively integrated into various transceiver modules and optical communication systems within large AI data centers. Lumentum is not a platform player like Broadcom, centered on switch ASICs/DSPs, nor a "broad-spectrum optics company" like Coherent, which presents a full stack including silicon photonics, VCSELs, and InP-on-silicon. Lumentum's true strength, and what attracts Wall Street capital, lies in mastering the most challenging segments of AI optical interconnect: InP lasers, EMLs, Ultra-High-Power (UHP) lasers, external laser sources, and OCS—areas最难 to scale production, achieve high yields, and where technical bottlenecks are most likely.
Lumentum forecasts that its EML capacity will increase by over 50% by the end of fiscal year 2026 compared to 2025. The company has already advanced an approximately 40% expansion plan for Indium Phosphide (InP) and predicts an 85% compound annual growth rate (CAGR) in AI data center demand for InP through 2030. The company also expects OCS shipment volumes to grow at a CAGR exceeding 150% between 2025 and 2028, targeting over $1 billion in annualized revenue from this segment by 2027.
From the GPU arms race to the "Optical Interconnect" era, the AI compute infrastructure frenzy is propelling the optical interconnect supply chain onto the core asset stage. The bottleneck for AI compute is expanding from the GPUs themselves to "how GPUs interconnect with high speed, low power, and low latency." This signifies the AI compute investment narrative accelerating its shift from a singular focus on AI GPU/ASIC compute competition toward full-stack AI systems driven by AI agents. In this narrative transition, data center CPUs, memory chips, and the optical interconnect supply chain are likely the biggest winning factions.
European financial giant BNP Paribas recently published a research report stating that the current vigorous construction of hyperscale AI data centers urgently requires optical interconnect and memory chip supply chains that are in a severe state of "supply falling short of demand," identifying these as the two most favored tech sector investment themes for the institution.
Lumentum (LITE.US), the core participant in the Google TPU AI compute chain and essential optical/module component supplier for the NVIDIA and AMD AI GPU chains, recently announced that its order book could be filled through 2028, with NVIDIA having committed $2 billion upfront to secure the majority of this capacity. Lumentum CEO Michael Hurlston stated that capital expenditure from U.S. hyperscale cloud service providers is enormous and shows no signs of abating, adding, "We are increasingly behind demand. We expect that within two quarters, our capacity through the end of 2028 will be sold out."
From an AI data center technology perspective, whether for the CPO optical era (co-packaging photonic components near switches/ASICs to reduce latency and power consumption), being deeply explored by both NVIDIA InfiniBand and Google, or for OCS optical path systems (using optical switching to replace electronic forwarding, reducing energy consumption and latency), substantial quantities of high-performance light sources, lasers, optical switches, and high-density optical interconnect modules are required to generate, transmit, and switch optical signals. Lumentum's deep technical积累 in these optoelectronic foundational components, including efficient lasers and独家 optical modules supporting OCS/CPO, positions it as a foundational supplier for the optical layer in multiple AI high-performance network architectures.
For Lumentum's fundamentals, inclusion in the Nasdaq 100 brings three positive impacts: First, passive fund and index product allocations will enhance liquidity and broaden institutional ownership. Second, the Nasdaq 100 status strengthens its "asset label" as a core AI compute infrastructure supplier, aiding a valuation re-rating from a traditional cyclical optical communications stock to an AI compute infrastructure growth stock. Third, signals from customers and the supply chain become clearer—NVIDIA has made strategic investments in and secured long-term procurement agreements with optical interconnect suppliers like Lumentum and Coherent. Corning's stock also surged due to expanding fiber connectivity products with NVIDIA, indicating that capital within the AI compute supply chain is spreading from the独占 "GPU-dominated compute investment theme" to areas like "memory, optics, and power."
For the entire optical interconnect industry, this is also a significant catalyst. It signifies the market beginning to acknowledge that AI data center beneficiaries extend beyond just GPUs, HBM, and server liquid cooling. Optical modules, lasers, optical chips, fiber optics, and the most advanced silicon photonics technologies and high-speed optical interconnect network equipment dominated by OCS and CPO are becoming the core bottleneck assets for the next wave of AI capital expenditure.
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