BNP Paribas: Lumentum(LITE.US) Partners with Nvidia and Google to Pave the Way for Rally, Significantly Raises Price Target to $1,040

Bank of America Securities reports that Lumentum (LITE.US) has recently secured design orders, including 100G and 200G EML chipsets for 800G and 1.6T optical modules set to begin mass production, which could push the company’s stock price above $1,000 per share. The bank has raised its target price for Lumentum from $625 to $1,040 and reaffirmed its “Outperform” rating.

On March 17, during an investor briefing, Bank of America analyst Karl Ackerman stated, “Lumentum convincingly outlined its goal of achieving an annualized EPS of over $30 by the end of 2028, driven by new design orders for its leading 800G and 1.6T transceiver EML chipsets, as well as 400mW ultra-high-power lasers used in NVIDIA (NVDA.US) co-packaged optical switches, and its self-developed MEMS-based optical switches, which we believe are mainly used in Google’s (GOOGL.US) TPU 3D Taurus network topology.”

He also noted, “Lumentum explicitly stated that with the new Qorvo factory in Greensboro coming online in early 2028, additional EML capacity will enable annual sales of approximately $8 billion and an operating profit margin of around 40%, further supporting its targets.”

Ackerman added, “We have upgraded our performance expectations for the next year to reflect the company’s new multi-year, multi-billion-dollar optical switch projects. Additionally, due to NVIDIA’s recent $2 billion investment to secure multi-year capacity, we expect production of the 400mW ultra-high-power lasers to increase, as NVIDIA plans to expand co-packaged optical switch capacity in its upcoming Vera Rubin AI infrastructure.”

Bank of America Securities has raised its 2027 EPS forecast for Lumentum from $19.40 to $25.89, with an implied EPS estimate for 2028 now at $38.95.