By Mackenzie Tatananni
Shares of optical networking giants Lumentum and Coherent continued their blistering rally on Friday, fueled by price-target hikes and an order forecast stretching through 2028.
It isn't unusual for shares of both optical networking companies to land among the S&P 500's top performers on any given day. Since joining the benchmark index at the end of March, the stocks -- which generally trade in tandem -- have only added to last year's eye-watering gains.
But the stocks were getting an extra boost on Friday after Lumentum's CEO pointed to sustained demand from hyperscalers and both companies received a fresh vote of confidence from J.P. Morgan.
Both Lumentum and Coherent have benefited from a surge in hyperscaler capital spending that has boosted their shares 431% and 1,667%, respectively, over the past 12 months. While players like Nvidia manufacture the AI processors, Lumentum and Coherent make the technology that allows chips to communicate with each other.
For now, there's no end in sight to the market appetite for Lumentum's products. CEO Michael Hurlston said Friday that the company was on track to fill out its order book through 2028, as demand for the components needed to connect GPU clusters grows faster than supply can be manufactured.
Separately, J.P. Morgan analyst Samik Chatterjee reiterated an Overweight rating on Lumentum stock and hiked his price target to a staggering $950 from $565. Shares advanced 2.7% to $918.50 on Friday, putting them on pace for a record closing high, according to Dow Jones Market Data.
Investor meetings around the Optical Fiber Communications Conference last month "collectively delivered a stronger-than-expected level of forward visibility across various growth drivers," Chatterjee wrote.
Coherent, meanwhile, advanced 3.7% to $294.66. The stock has risen for four days straight and gained more than 16% over that span. Chatterjee similarly reiterated an Overweight rating on the stock and slightly raised his price target to $300 from $245.
Amid what the analyst describes as an "AI-driven transformation of the data center," the total addressable market for optics is expanding "well beyond Coherent's incumbency in the traditional pluggable transceiver market." In his view, the company is uniquely positioned to snap up share in two emerging growth areas: co-packaged optics and optical circuit switches.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 10, 2026 11:14 ET (15:14 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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