Lumentum (NASDAQ:LITE) just got a major vote of confidence from Barclays, sending its stock up 5% this morning. The firm flipped its rating from Underweight to Overweight and jacked up the price target from $80 to $125, citing an explosive surge in hyperscale demand and a growing shift toward U.S.-based supply chains. Barclays had doubts about Lumentum scaling beyond Alphabet (NASDAQ:GOOG)not anymore. Hyperscalers are onboarding at lightning speed, and that changes everything.
The semiconductor sector lagged the S&P 500 in 2024, but AI-driven momentum kept semiconductor-heavy ETFs like SMH ahead of QQQ. Barclays is betting big on Lumentum's 59% year-on-year port count jump and a 76% datacom revenue spike in 2025. That's why they're getting in earlyeven with management guiding lower for Q1, they see the long-term upside as too big to ignore. Meanwhile, Coherent (NYSE:COHR) is also in the mix, but asset divestitures keep it tied down for now.
For investors, the takeaway is clear: AI-driven infrastructure spending isn't slowing down. Lumentum is riding a wave that only gets bigger from here. With hyperscalers rushing to secure supply, this could be the start of a major run-upand Barclays just made sure Wall Street is paying attention.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.