In July, the I/O Fund team wrote a deep dive on networking entitled: “AI Networking in 2026: What’s in Motion Tends to Stay in Motion.” Lumentum embodied the thesis of that report last night, which is that networking is evolving to solve crucial bottlenecks for training, and more importantly, inference workloads, to where the demand driving this transition shows no signs of slowing down. From the core driver EMLs to the incoming CW lasers, from the newer opportunity in OCS, to the incoming NPO/CPO opportunity – if it’s crucial to increasing speeds and lower latency in AI clusters, then Lumentum is there. This quarter, revenue increased 109% YoY and 24.5% QoQ for the third consecutive quarter of 20%+ sequential growth. Adjusted gross margin crossed 50% much earlier than anticipated and the guide to $1.25B at the midpoint is being reached one quarter earlier the company’s previous target model. The guide implies a fourth consecutive quarter of over 20% sequential growth with YoY accelerating to 134.2%. Below, we look at how the acceleration is broad-based and why Lumentum keeps winning.
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