The chief executive said the company cannot meet about 70% of demand for some products through next year. Shares rose about 6%, lifting optical-networking peers on a day chip stocks were mixed.
October 9, 2026
Tickers: LITE, CIEN, COHR, AAOI, NVDA, SOXX
The bottleneck in artificial-intelligence hardware has moved, at least for one supplier, from chips to the lasers that connect them.
Lumentum's optical components are "completely sold out" through early 2029, Chief Executive Michael Hurlston said in an interview in Tokyo on Friday. The company is unable to meet about 70% of demand for some products through next year and about 30% of demand for others through 2028, he said. Six months ago, Hurlston had said Lumentum was on track to sell out its capacity by 2028.
"We are really trying to catch up, add capacity as fast as we can, but we are very, very far behind what customers want," he said.
What it makes
Lumentum produces indium phosphide devices, including lasers used in high-speed optical links inside data centers. As AI clusters grow, more of the connections between servers run over optics, and supply of the underlying lasers has not kept pace. Nvidia invested $2 billion in Lumentum earlier this year.
The company has increased output at its facility in Sagamihara, near Tokyo, twelvefold over the past two years and plans to invest at least $350 million there and at a neighboring site. It has also added capacity at its plant in Caswell, England. Hurlston said large cloud providers are willing to share some of the capital cost, and that broadening the product range will probably require an acquisition, possibly within the next year. New capacity built from scratch typically takes three to five years, he said.
The stock
Lumentum shares rose about 6% to $1,111.10 in early afternoon, after touching $1,143, a 52-week high. The company is valued at about $86 billion. Its 52-week low is $147.81.
The move spread through optical networking. Ciena rose about 5.9% and Coherent about 2.8%. The iShares Semiconductor ETF was little changed, so the gains were specific to the optics group rather than a broad chip rally.
What sold out means
A sold-out order book has two sides for investors. It offers revenue visibility for years and gives the supplier leverage on price. It also caps how fast the company can grow, since output is limited by factories that take years to build, and leaves room for customers to qualify other suppliers.
The comments came in an interview, not in a filing, and the company has not changed its quarterly guidance.
Two ways to read it
One reading is that Lumentum's pricing power and visibility have rarely been better. Demand exceeds supply by a wide margin, the sold-out window lengthened by roughly a year in six months, and hyperscalers are helping fund capacity.
The other reading is that the constraint is the story. Revenue growth is limited by how fast new lines come up, an acquisition may be needed to broaden the product set, and a stock that has risen more than sevenfold from its low already reflects much of the scarcity.
What to watch
Lumentum's next quarterly report will show whether the backlog is turning into higher prices and margins. Any announced capacity deal with a hyperscaler, or an acquisition, would test management's plan to close the gap.