Bank of America previously reaffirmed its "Neutral" rating on Lumentum Holdings (LITE.US) and raised its price target from $210 to $375. The bank stated that the substantial increase in its price target was due to strong market demand for optical transceivers and optical components, noting that supply in these areas still cannot meet current demand. Furthermore, Morgan Stanley also maintained its "Neutral" rating on Lumentum Holdings, increasing its price target from $190 to $304. The bank indicated that the scope of artificial intelligence deals in 2025 has expanded beyond semiconductor stocks and will benefit infrastructure companies, particularly those in the optical communications market. Morgan Stanley expects this trend, especially for optical communication companies, to persist into the first half of 2026. The explosion in AI computing power has created an extreme demand for high-speed interconnectivity, with CPO (co-packaged optics) technology being the core solution to break through bandwidth and power consumption bottlenecks. Simply put, CPO integrates the optical engine and the chip (CPU/GPU/switch ASIC) together, allowing electrical signals to be converted into optical signals without long-distance transmission, fundamentally addressing two major pain points of traditional optical modules: a dramatic reduction in power consumption and a surge in bandwidth density.
Comments