Lumentum

LITE

Market cap $56.1B

Twist Bioscience provides exposure to two powerful long-term trends in Health Care, AI-supported drug discovery and next-generation sequencing. Lumentum offers exposure to a key bottleneck in AI infrastructure, optical networking, as rising data demand drives a shift away from copper-based systems. Insmed's thesis had largely played out following positive TPIP data and upward revisions to Brinsupri sales.

Market volatility in H1 2026, driven by inflation, geopolitical risk, and AI CapEx, has created compelling buy-the-dip opportunities for fundamentally strong stocks. The Quant system's Top 10 Strong Buy stocks outperformed, delivering 70% YTD versus S&P 500's 8.3%, with robust historical returns and sector diversification.

Lumentum (LITE) has been upgraded to a Zacks Rank #2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.

Lumentum's stronger execution, AI-driven growth and lower valuation give it the edge over Applied Digital for long-term upside and stability.

Shares of Applied Optoelectronics (NASDAQ:AAOI) are sliding Wednesday afternoon, down 12% to $110 and change, as investors pull back from the highest-beta corners of the AI optics trade.

AMD stock price exploded higher in the quarter as the evolution of the LLM market has led us to agentic AI workloads. CrowdStrike's strong performance in the quarter was due to a narrative shift in the AI trade. Intuitive Surgical stock's second quarter underperformance was due to multiple contraction, which dinged the stock for 21%, slightly offset by strong forward earnings growth.

Shares of Applied Optoelectronics (NASDAQ:AAOI) jumped 6% to $119.10 in early trading Tuesday, rebounding from a rough Monday session on fresh news of a major Texas manufacturing expansion.

Nvidia (NASDAQ:NVDA | NVDA Price Prediction), along with the broader semi scene, is bouncing back again.

AI optical market TAM is projected to grow at 35-40% CAGR over the next two years, driven by rapid adoption in AI data centers. Lumentum, Applied Optoelectronics, and Marvell Technologies are well-positioned AI optical stocks with attractive valuations and robust growth prospects. Lumentum and Applied Optoelectronics offer compelling forward revenue multiples (6x and 9x, respectively), with accelerating revenues and margin expansion supporting bullish outlooks.

Artificial intelligence spending is entering a new phase.