Key Takeaways
- Shares of Lumentum surged 16% to reach $1,053.09 on Monday following Nasdaq’s announcement that the company will enter the Nasdaq 100 index on May 18, taking CoStar Group’s place.
- Index inclusion sparked automatic purchases from passive funds tracking the benchmark, creating additional buying pressure beyond fundamental strength.
- The company delivered record third-quarter revenue of $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 climbed 13% and 11% respectively, each achieving record closing prices.
- Shares have now rallied 186% in 2026 and more than 1,300% over the trailing twelve months, supported by Nvidia’s $2 billion strategic investment.
Shares of Lumentum (LITE) reached an all-time closing high of $1,053.09 on Monday, May 12, climbing 16% after Nasdaq confirmed the optical technology company will be added to the Nasdaq 100 index on May 18, taking the spot currently held by CoStar Group (CSGP).
The rally positioned Lumentum as the leading gainer within the S&P 500 during Monday’s trading session. In comparison, both the S&P 500 and Dow Jones Industrial Average advanced a modest 0.2% for the day.
The Nasdaq 100 represents the 100 largest non-financial corporations listed on the Nasdaq exchange. Index additions typically trigger automatic buying from passive funds that replicate the benchmark’s holdings. This mechanical purchasing pressure entered the market swiftly.
Lumentum shares have now appreciated 186% since the beginning of the year. Looking back twelve months, the stock has skyrocketed over 1,300%.
The index announcement arrived shortly after Lumentum unveiled its fiscal third-quarter 2026 results on May 5. Revenue reached $808.4 million — establishing a new company benchmark and marking a 90% increase versus the year-ago period. The stock experienced roughly a 10% decline on May 6 and May 7 after revenue figures, though impressive, fell short of Wall Street’s heightened projections. By Friday, shares had recovered their losses, and Monday’s session confirmed renewed bullish momentum.
Profitability Expansion Takes Center Stage
CEO Michael Hurlston highlighted margin improvement as the quarter’s most significant development. Gross margin expanded by 540 basis points from the previous quarter. Operating margin widened by an even more substantial 700 basis points during the same timeframe.
Non-GAAP earnings per share reached $2.37 for the third quarter, up dramatically from $0.57 in the comparable period last year. GAAP net income totaled $144.2 million, a sharp reversal from the $44.1 million loss recorded in Q3 fiscal 2025.
The company closed the quarter with $3.17 billion in cash and short-term investments, representing a $2.02 billion increase from the preceding quarter, primarily attributable to a Series A Convertible Preferred Stock offering completed in March 2026.
For the fourth quarter, Lumentum projected revenue between $960 million and $1.01 billion — approximately 18% sequential growth from the third quarter’s already-record performance. Non-GAAP earnings per share guidance was set at $2.85 to $3.05.
Optical Sector Rallies in Tandem
Lumentum’s surge wasn’t an isolated event on Monday. Coherent advanced 13% to $379.69 while Corning jumped 11% to $207.39. The three optical networking companies occupied the top three positions among S&P 500 gainers for the session, with both Coherent and Corning also establishing record closing highs.
Coherent has gained 106% year-to-date. Corning has surged 136% in 2026 and 342% over the past twelve months.
In March, Nvidia disclosed $2 billion strategic investments in both Lumentum and Coherent, accompanied by multibillion-dollar supply commitments with each firm.
Bank of America added Corning to its “U.S. 1 List” on Monday — the investment bank’s compilation of top investment ideas.
Hurlston emphasized that co-packaged optics and optical circuit switches represent growth catalysts still in their infancy. “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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