5 Best AI Data Center Stocks to Buy Right Now

4. Lumentum Holdings Inc. (NASDAQ:LITE)

Number of Hedge Fund Holders: 97 

Lumentum Holdings Inc. (NASDAQ:LITE) stock has been in the headlines recently after the company announced a multi-year deal for Optical Circuit Switching (OCS) products worth billions of dollars during the Optical Fiber Communication Conference 2026. Analysts at Stifel and JPMorgan have indicated that this deal likely involves a Magnificent Seven hyperscaler, widely rumored to be Google or Amazon, looking to bypass traditional electrical switches for faster, light-based networking. In addition to this blockbuster announcement, the firm also continues to execute financially across all important metrics.

In Q2 2026, Lumentum Holdings Inc. (NASDAQ:LITE) reported an EPS of $1.67, beating the consensus estimate of $1.23 by 35.8%. Quarterly revenue reached $665.5 million, a 65.5% year-over-year increase. Non-GAAP operating margins expanded by over 1,500 basis points in late 2025, signaling that Lumentum is becoming significantly more profitable as it scales. The company has been emerging as a secondary play on NVIDIA’s latest architecture as well. Lumentum’s 1060nm VCSEL technology is now being used for scale-up networks that connect HBM4 memory directly to GPUs. Unlike traditional silicon photonics, Lumentum’s VCSEL platform provides a highly reliable alternative that elite investors see as a hedge against supply chain constraints at other photonics firms.