2 Optical Stocks to Buy After Tuesday's Sell
Lumentum (LITE) reported a 109% YoY revenue increase to $1.01B in Q4, while Coherent (COHR) saw a 34% rise to $2.05B. Both stocks fell over 9% on Tuesday amid AI sector sell-off, despite strong earnings and guidance. Lumentum trades at 26x revenue, 40x earnings; Coherent at 8x revenue, 33x earnings.
How this was made
The 30-second read
Why it matters
The earnings beats and raised guidance provide a catalyst for a short‑term bounce, but high multiples and AI demand uncertainty temper upside.
Market read
Both companies posted strong Q4 results, yet their stocks dropped, creating potential entry points for traders.
What to watch
Potential supply bottlenecks could limit growth, and valuation remains elevated.
Background
AI‑related stocks fell sharply on Tuesday as investors reassessed demand sustainability, despite strong earnings from Lumentum and Coherent.
Ticker impact
Lumentum reported FY Q4 revenue up 109% YoY and raised Q1 guidance, causing a 9.9% price drop.
Potential rebound to prior levels if demand remains constrained.
Guidance implies continued double‑digit growth; valuation still high but market may over‑react.
Coherent posted record Q4 revenue (+34% YoY) and margin expansion, guiding higher Q1 revenue, leading to a 12.8% decline.
Likely to recover as investors digest improved earnings profile.
Earnings beat and guidance lift fundamentals; price drop may be a buying opportunity.
Market effects
Highlights strength and supply constraints in AI data‑center optical components.
U.S. tech sector sees pullback on AI hype, but fundamentals remain solid.
Signals broader AI infrastructure demand trends affecting global semiconductor supply chains.
Counterpoint
Current sell‑off may overstate risk; fundamentals suggest upside.
Key entities
- CompanyLumentum Holdings
Optical components supplier for AI data centers.
- CompanyCoherent Inc.
Provider of lasers and optical transceivers for data centers.
