The semiconductor industry outlook for 2026 is adjusting after a 40% rally in 2025. Mizuho identifies investment opportunities beyond industry leaders like Nvidia and Broadcom. Lumentum, specializing in optical networking, benefits from increased hyperscalers’ capex, playing a crucial role in AI processing expansion.

Lumentum, based in San Jose, focuses on optical and photonics technologies. The company is key in data center interconnects and cloud connectivity, with a market cap of around $24 billion. LITE stock has shown dynamic pricing, hovering around $350 due to market sentiment and the optical market’s cyclic nature.

Valuations for Lumentum are high, with a forward P/E ratio of 89x and a P/S ratio of 15x. Market focus is on the growth story enabled by AI architecture, potentially supporting a revaluation in optics. Fiscal Q1 2026 results show strong revenue growth, with management guiding for further market expansion.

Lumentum’s Q1 results demonstrate robust momentum in key markets, leading to increased guidance for Q2. Revenue projections range from $630 million to $670 million, reflecting confidence in market demand. Analysts view Lumentum as a key player in AI infrastructure, changing risk assessment based on valuation and market influence.

Lumentum has a consensus “Moderate Buy” rating, with an average target price of $281.28. Analysts see potential downside but note bright prospects if AI-driven optics adoption accelerates. Mizuho’s recommendation underscores the role of less conspicuous facilitators in the AI investment landscape, making Lumentum a stock worth watching in 2026.

Read more at Yahoo Finance: Mizuho Says This 1 Lesser-Known Chip Stock Is a Top Buy for 2026