LITE
Lumentum Holdings Inc.NasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Aug 23, 2026
What drives LITE's base case?
base-case thesisThe base case gives substantial weight to management's Q1 FY2027 guidance and the sharp improvement from FY2025 losses to FY2026 profitability. It assumes AI-related optical demand continues across components and systems, while recognizing that growth rates naturally decline as the revenue base becomes larger. Profitability improves further but does not permanently match the highest guided non-GAAP quarter.
What shapes the assumptions
AI compute and bandwidth demand
Revenue growth
Raises revenue growth
Components and systems expansion
Product revenue mix
Raises revenue growth
Scale benefits
GAAP operating margin
Raises operating margin
International tax exposure
Effective tax rate
Informs tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 71.2% a year. Over the last 5 years it grew 11.6% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- How much of this is timing?
- The price has fallen 3.6% since this valuation was struck on 2026-08-23, so some of the gap opened up after these figures were set.
- How confident is this estimate?
- Robustness 42.0/10 (Fragile) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
- Share count is still growing
- Diluted shares grew 38.8% year on year. This valuation uses today's share count, not tomorrow's — continued dilution would spread the same value across more shares.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$3B
Diluted shares
96,200,000
Net cash
$406.1M
Bear
low confidence$70.74
IV / share
-91.7% vs $847.37
- Explicit cash flows
- $20.29
- Terminal value
- $46.23
- Net cash
- $4.22
- Intrinsic value / share
- $70.74
65.3% of the value rests on the terminal value — elevated dependency.
Revenue growth18.0% → 10.0% → 6.0% → 4.0% → 3.0%medium
How derived: FY2026 revenue grew 0.832 and Q4 revenue grew 1.093, but the path assumes sharp normalization as the unusually large AI-related ramp matures and the historical 2022-2024 downturn pattern reappears.
Why this confidence: Recent acceleration ↑, Long forecast horizon ↓, Cyclical historical revenue ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum reported FY2026 revenue growth of 0.832 and Q4 year-over-year growth of 1.093.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum's historical revenue declined 0.231 in FY2024 before recovering in FY2025.[Lumentum FY2025 Form 10-K]· primary
Operating margin24.0%medium
How derived: The Q4 GAAP operating margin of 0.278 and FY2026 GAAP margin of 0.174 support recovery, but this case discounts the Q1 FY2027 non-GAAP guidance of roughly 0.4 for normalization and mix pressure.
Why this confidence: Sequential margin improvement ↑, Low visibility into adjustments ↓, Margin normalization risk ↓
No tracked driver measures this assumption yet.
Evidence for
- Q4 FY2026 GAAP operating margin was 0.278, up from negative 0.017 in Q4 FY2025.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum cautioned that non-GAAP adjustments including restructuring, acquisition, integration and tax items are volatile and have low future visibility.[Lumentum FY2026 Results]· primary
Tax rate18.0%low
How derived: The rate assumes a below-statutory effective tax burden because Lumentum operates internationally and has historically volatile tax outcomes, while allowing for some normalization as profitability improves.
Why this confidence: International tax exposure ↓, Improving profitability ↑, Volatile one-time items ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum identifies international operations and changing tax laws as sources of financial and operating risk.[Lumentum FY2025 Form 10-K]· primary
Evidence against
- The company's reported GAAP results can include substantial nonrecurring items that make the effective tax rate difficult to extrapolate.[Lumentum FY2026 Results]· primary
Reinvestment rate35.0%low
How derived: The rate assumes that sustaining rapid optical and systems growth requires substantial reinvestment in capacity, working capital and product development, with a higher burden than the base and bull cases.
Why this confidence: Optical capacity requirements ↑, Strong recent cash generation ↓, Limited disclosed long-term capital-spending detail ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum's business depends on continued investment in research, development, manufacturing capacity and supply-chain execution.[Lumentum FY2025 Form 10-K]· primary
Evidence against
- FY2026 cash, cash equivalents and short-term investments increased by $1.9 billion year over year, showing that recent growth generated significant liquidity.[Lumentum FY2026 Results]· primary
Terminal growth2.0%low
How derived: The terminal rate is set near mature economic growth because the bear case assumes AI-driven optical demand eventually becomes a normal cyclical market rather than remaining an exceptional growth engine.
Why this confidence: Mature-market discipline ↑, Secular AI exposure ↓, Very long forecast horizon ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum describes its markets as subject to cyclical demand, rapid technological change and intense competition.[Lumentum FY2025 Form 10-K]· primary
Evidence against
- Management described AI compute, optical connectivity, OCS, cloud modules and 1.6T adoption as secular growth drivers.[Lumentum FY2026 Results]· primary
Base
low confidence$132.42
IV / share
-84.4% vs $847.37
- Explicit cash flows
- $35.29
- Terminal value
- $92.91
- Net cash
- $4.22
- Intrinsic value / share
- $132.42
70.2% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth28.0% → 18.0% → 12.0% → 8.0% → 5.0%medium
How derived: The path starts below the Q1 FY2027 guidance implied by the latest quarterly run rate, then moderates as FY2026's 0.832 growth transitions toward a durable but slower AI-networking expansion.
Why this confidence: Explicit management guidance ↑, Multiple years of moderation ↑, Cyclical industry history ↓
No tracked driver measures this assumption yet.
Price implies: 71.2% vs our 14.2% — one of several sets that fit this price
Evidence for
- Management forecast Q1 FY2027 revenue of $1.225 billion to $1.275 billion and said AI demand was driving acceleration ahead of its target model.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum's revenue fell 0.231 in FY2024 before the latest rebound, demonstrating that demand can reverse sharply.[Lumentum FY2025 Form 10-K]· primary
Operating margin32.0%medium
How derived: FY2026 GAAP operating margin was 0.174, Q4 was 0.278 and Q1 FY2027 non-GAAP guidance is about 0.4, so 0.32 represents continued scale benefits with a haircut for normalization and accounting differences.
Why this confidence: Clear recent margin expansion ↑, Non-GAAP to GAAP comparability ↓, Cyclical operating leverage ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum reported FY2026 GAAP operating margin of 0.174 and Q4 GAAP operating margin of 0.278, while guiding to non-GAAP operating margin of 0.395 to 0.405 for Q1 FY2027.[Lumentum FY2026 Results]· primary
Evidence against
- FY2025 GAAP operating margin was negative 0.109, showing that the business has recently experienced substantial operating leverage in both directions.[Lumentum FY2026 Results]· primary
Tax rate20.0%low
How derived: The base case assumes a normalized effective tax rate of 0.2, reflecting Lumentum's international footprint and tax volatility without assuming a permanently unusually low tax burden.
Why this confidence: International tax complexity ↓, Normalization assumption ↑, Low visibility into tax adjustments ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum reports operations across multiple jurisdictions and identifies international tax rules as a risk factor.[Lumentum FY2025 Form 10-K]· primary
Evidence against
- Lumentum stated that future non-GAAP income-tax reconciling adjustments are highly volatile and have low visibility.[Lumentum FY2026 Results]· primary
Reinvestment rate28.0%medium
How derived: The rate assumes meaningful ongoing investment to support components, systems and next-generation optical products, but allows scale and cash generation to reduce reinvestment intensity over time.
Why this confidence: Growth across both product categories ↑, Strong cash generation ↓, Capital intensity uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- FY2026 revenue increased in both components and systems, with components up 0.797 and systems up 0.907, requiring continued product and manufacturing support.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum ended FY2026 with $2.7 billion of cash, cash equivalents and short-term investments, up $1.9 billion from FY2025.[Lumentum FY2026 Results]· primary
Terminal growth2.5%low
How derived: The rate assumes optical connectivity retains a modest structural growth premium after the forecast period, but not the exceptional FY2026 pace.
Why this confidence: Secular optical-connectivity drivers ↑, Competitive and cyclical markets ↓, Terminal-period uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- Management described AI compute, higher bandwidth, OCS solutions, cloud modules and 1.6T adoption as ongoing growth drivers.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum warns that its markets face rapid technological change, competition and cyclical demand.[Lumentum FY2025 Form 10-K]· primary
Bull
low confidence$190.76
IV / share
-77.5% vs $847.37
- Explicit cash flows
- $47.15
- Terminal value
- $139.39
- Net cash
- $4.22
- Intrinsic value / share
- $190.76
73.1% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth35.0% → 25.0% → 16.0% → 10.0% → 6.0%low
How derived: The path assumes the Q1 FY2027 guidance and management's AI-connectivity commentary mark the beginning of a multi-year expansion in OCS, cloud modules, 1.6T, CPO and NPO products before moderating from the initial surge.
Why this confidence: Several named product growth vectors ↑, Management guidance ahead of target model ↑, Cyclical industry and customer concentration risk ↓
No tracked driver measures this assumption yet.
Evidence for
- Management said OCS, cloud modules, 1.6T adoption, high-power CPO lasers, ELS modules and NPO engagements were beginning to layer into growth.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum's FY2024 revenue declined 0.231, demonstrating that even a strong optical business can experience major demand contractions.[Lumentum FY2025 Form 10-K]· primary
Operating margin36.0%low
How derived: The bull case assumes sustained mix improvement and scale lift the FY2026 GAAP margin above 0.174 toward, but below, the 0.395 to 0.405 Q1 FY2027 non-GAAP guide after allowing for recurring costs and normalization.
Why this confidence: Large sequential margin improvement ↑, Product-mix upside ↑, Cyclical operating leverage ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum's Q4 FY2026 GAAP operating margin was 0.278, while Q1 FY2027 non-GAAP operating margin guidance was 0.395 to 0.405.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum reported FY2025 GAAP operating margin of negative 0.109, indicating that margins can deteriorate rapidly when demand weakens.[Lumentum FY2026 Results]· primary
Tax rate20.0%low
How derived: The bull case does not assume tax-rate engineering; it uses the same normalized 0.2 rate as the base case because stronger earnings do not by themselves eliminate international tax complexity.
Why this confidence: Same normalized rate as base ↑, International tax complexity ↓, Low visibility into adjustments ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum operates internationally and faces tax-law and jurisdictional risks that can affect its effective tax rate.[Lumentum FY2025 Form 10-K]· primary
Evidence against
- The company disclosed low visibility into future non-GAAP income-tax reconciling adjustments.[Lumentum FY2026 Results]· primary
Reinvestment rate25.0%low
How derived: The bull case assumes high growth is supported by strong internal cash generation, so reinvestment remains substantial but falls as a percentage of cash flow through manufacturing scale and operating leverage.
Why this confidence: Strong recent liquidity build ↑, Multiple product ramps ↓, Capital-spending disclosure uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- Lumentum's FY2026 cash, cash equivalents and short-term investments increased by $1.9 billion year over year while revenue grew 0.832.[Lumentum FY2026 Results]· primary
Evidence against
- Management identified new optical products and increasing demand for CPO, ELS, OCS and 1.6T solutions, which may require continued capacity and development investment.[Lumentum FY2026 Results]· primary
Terminal growth3.0%low
How derived: The bull case gives the company a modest structural growth premium because management describes optical links as increasingly central to AI data-center connectivity, while still keeping terminal growth below recent expansion rates.
Why this confidence: Secular AI infrastructure demand ↑, Product roadmap breadth ↑, Terminal value sensitivity ↓
No tracked driver measures this assumption yet.
Evidence for
- Management said AI workloads are increasing optical-link speed and bandwidth requirements and described optical connectivity as a primary means of data-center connectivity.[Lumentum FY2026 Results]· primary
Evidence against
- Lumentum's filings identify rapid technological change, intense competition and cyclical demand as material risks.[Lumentum FY2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating42 / 100 · Fragile
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 70% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The tax rate assumption is low-confidence.→ tax rate
- The terminal growth assumption is low-confidence.→ terminal growth
- Diluted share count grew 39% year over year, which reduces per-share participation in business growth.→ per-share economics
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | 6.1% | -0.51 | 43.9% | 68.3M | 2.4% |
| Q2 2025 | 9.7% | -0.23 | 52.3% | 68.9M | 2.5% |
| Q3 2025 | 16.0% | -0.93 | -135.8% | 69.3M | 2.7% |
| Q1 2026 | 58.4% | -0.23 | 53.7% | 78.3M | 14.6% |
| Q2 2026 | 65.5% | 0.49 | 312.7% | 87.8M | 27.4% |
| Q3 2026 | 90.1% | 0.82 | 188.5% | 96.2M | 38.8% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 10-year U.S. Treasury par yield was 4.74% on August 21, 2026, used as the long-term risk-free rate.
A levered beta of 1.3 is used as a market-risk proxy for a cyclical semiconductor and optical-technology business; it is an estimate rather than a company disclosure.
The August 21, 2026 closing share price was $866.71 per share.
Generated 8/23/2026, 12:18:12 PM · pipeline v1.1.0