TLDR
- Shares of Lumentum climbed 16% to reach $1,053.09 on Monday following confirmation that the company will become part of the Nasdaq 100 index on May 18, taking the place of CoStar Group.
- The inclusion sparked automatic purchases from index funds, creating substantial mechanical buying pressure that amplified existing upward momentum.
- The company delivered all-time high Q3 revenue totaling $808.4 million, representing a 90% jump from the prior year, while gross margin improved by 540 basis points sequentially.
- Fellow optical technology companies Coherent and Corning experienced gains of 13% and 11% respectively, each achieving record closing prices.
- Year-to-date gains for Lumentum now stand at 186%, with the stock climbing over 1,300% across the trailing 12-month period, supported by Nvidia’s $2 billion strategic investment.
Shares of Lumentum (LITE) climbed to an unprecedented closing price of $1,053.09 on Monday, May 12, posting a 16% gain after Nasdaq confirmed the optical technology company’s upcoming inclusion in the Nasdaq 100 index on May 18, where it will replace CoStar Group (CSGP).
The impressive performance positioned Lumentum as the leading gainer within the S&P 500 during Monday’s trading session. In contrast, both the S&P 500 and Dow Jones Industrial Average posted modest gains of just 0.2%.
The Nasdaq 100 index comprises the 100 largest non-financial corporations listed on the Nasdaq stock exchange. When a company receives index inclusion, passive funds that track the benchmark must purchase shares, creating immediate and substantial buying pressure.
Lumentum has now accumulated gains of 186% since the beginning of the year. Looking at the 12-month trailing period, shares have skyrocketed more than 1,300%.
The index announcement arrived shortly after Lumentum unveiled its fiscal Q3 2026 financial results on May 5. The company reported revenue of $808.4 million — an all-time company record representing a 90% year-over-year increase. Shares initially declined approximately 10% on May 6 and May 7 despite the robust revenue figure, as the results fell short of Wall Street’s lofty projections. However, the stock rebounded by Friday, with Monday’s surge confirming the continuation of its bullish trajectory.
Profitability Gains Emerge as Key Highlight
Chief Executive Officer Michael Hurlston emphasized that margin improvement represented the most significant aspect of the quarterly performance. Gross margin expanded by 540 basis points on a sequential quarterly basis. Operating margin demonstrated even stronger growth, widening by 700 basis points compared to the previous quarter.
Non-GAAP earnings per share reached $2.37 for the third quarter, substantially higher than the $0.57 reported in the corresponding quarter last year. On a GAAP basis, net income totaled $144.2 million, a dramatic reversal from the $44.1 million loss recorded in Q3 FY2025.
The company concluded the quarter holding $3.17 billion in cash and short-term investments, reflecting an increase of $2.02 billion from the preceding quarter, primarily attributable to a Series A Convertible Preferred Stock offering completed in March 2026.
Looking ahead to Q4, Lumentum projected revenue in the range of $960 million to $1.01 billion — representing approximately 18% sequential growth from Q3’s already-record performance. Non-GAAP EPS guidance was established at $2.85 to $3.05.
Industry Peers Experience Parallel Gains
Lumentum’s rally didn’t occur in isolation on Monday. Coherent shares advanced 13% to reach $379.69, while Corning jumped 11% to close at $207.39. The three optical networking stocks collectively occupied the top three positions among S&P 500 gainers for the session, with both Coherent and Corning also achieving record closing prices.
Coherent has accumulated gains of 106% year-to-date. Corning has surged 136% since January and posted gains of 342% over the past 12 months.
In March, Nvidia disclosed $2 billion strategic investments in both Lumentum and Coherent, accompanied by multibillion-dollar procurement agreements with each firm.
Bank of America on Monday elevated Corning to its “U.S. 1 List” — the financial institution’s curated selection of top investment ideas.
Hurlston identified co-packaged optics and optical circuit switches as emerging growth catalysts still in early development phases. “As our key growth drivers of co-packaged optics and optical circuit switches begin to kick in,” he stated, “we would expect further increases in earnings power.”
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