Lumentum Eyes Turnaround After Tough FY24, with Strong Cloud & AI-Driven Growth Ahead

Lumentum Holdings (NASDAQ: LITE), a leader in optical and photonic technologies, faced a challenging FY 2024, with revenue falling -23% year-over-year. However, the company is poised for a recovery, with Visible Alpha consensus estimates indicating a +13% revenue increase in FY 2025 and a more robust +31% growth in FY 2026.

The decline in 2024 was primarily driven by weak demand in Lumentum’s Industrial Tech segment, which represents around 20% of total revenue, alongside muted growth in its telecom division, part of its Cloud & Networking segment. The latter continues to grapple with production constraints, hampering its ability to meet customer demand.

Looking ahead, Lumentum’s Datacom segment within its Cloud and Networking segment is set to drive the recovery in 2025, fueled by the rising demand for optical components serving AI, ML, and data center interconnect (DCI) applications. As part of its strategic shift, the company is refocusing on the cloud and networking markets. By 2027, the Cloud and Networking segment is projected to contribute 87% of Lumentum’s revenue, up from 61% in 2019 and 79% in 2024, significantly reshaping its revenue mix.