JPMorgan analyst Samik Chatterjee reiterated an Overweight rating on optical-technology company Lumentum on June 11, maintaining a $1,130 price target. Supply-chain checks show that Nvidia's large-scale co-packaged optics rollout remains on track and may be ahead of schedule, contradicting investor worries about delays. The analyst also cited growing interest from cloud-service providers beyond Nvidia, broadening the demand outlook for Lumentum's optical components used to increase bandwidth and reduce power consumption in AI systems.
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JPMorgan analyst Samik Chatterjee reiterated an Overweight rating on Lumentum Holdings Inc. (NASDAQ:LITE) on June 11, maintaining a $1,130 price target. He cited supply-chain checks indicating that Nvidia's large-scale co-packaged optics (CPO) rollout remained on track and may be ahead of schedule, pushing back on investor concerns about delays.
Why it matters
Lumentum develops optical and photonic technologies for AI and cloud networking. Co-packaged optics places optical engines close to switch chips to increase bandwidth while reducing power consumption in large AI systems. JPMorgan's assessment suggests sustained demand for Lumentum's components, with potential to broaden beyond Nvidia to cloud-service providers and other customers.
What to watch
JPMorgan valued Lumentum at roughly 25 times estimated 2028 earnings, viewing that as reasonable given projected annual earnings growth above 40%. The thesis depends on deployment schedules, customer concentration, and Lumentum's ability to convert product demand into sustained shipments and earnings growth.
Lumentum's stock pullback in early June reflected broader investor skepticism about the pace of co-packaged optics deployment and summer catalysts. JPMorgan's June 11 reiteration directly addresses these concerns by grounding its thesis in supply-chain evidence—namely that Nvidia's large-scale CPO rollout remains on schedule and may even be ahead. This signals confidence that near-term demand will materialize as expected.
The analyst also highlighted a diversification opportunity: while Nvidia is the visible driver, cloud-service providers and other customers are showing growing interest in CPO technology. This broadens Lumentum's addressable customer base beyond Nvidia's direct requirements, potentially stabilizing revenue growth even if Nvidia's rollout faces headwinds. At 25 times 2028 estimated earnings, JPMorgan considers the stock fairly valued relative to the 40%-plus annual earnings-growth projection the thesis assumes. However, the investment case remains contingent on three variables: the actual timing of customer deployments, the degree of customer concentration risk (implied by the Nvidia focus in current narrative), and Lumentum's operational ability to fulfill product demand at scale—each of which could alter the earnings trajectory.
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