Jim Cramer Discusses the Massive Rally and S&P 500 Addition of Lumentum

Lumentum Holdings Inc. (NASDAQ:LITE) is one of the stocks Jim Cramer discussed amid the reshuffling of the S&P 500. Cramer noted NVIDIA’s decision to invest in the company, as he said:

Next, a week ago, we learned that NVIDIA was investing $2 billion apiece in a pair of fiber optic plays, Coherent and Lumentum. They both have a lot of exposure to AI infrastructure. Apparently, S&P and NVIDIA have the same style because both those stocks are getting added to the S&P 500… Lumentum is similar, except that stock has been even hotter. It’s up more than 1,300% from its post-Liberation Day lows. The stock’s a lot more expensive than Coherent on a price-to-earnings basis, higher risk, higher reward. But they’re both plays on optical networking equipment for the data center.

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Lumentum Holdings Inc. (NASDAQ:LITE) designs and sells optical and photonic products, including lasers and components, for cloud networking, data centers, and industrial applications. During the February 27 episode, a caller sought Cramer’s advice on whether they should sell a little of the stock or hold their position. The Mad Money host replied:

Alright, so Lumentum, Jeff Marks, who is my colleague, he and I looked at this stock, and also Ben Stoto, who is a research director, and the stock’s like this. Okay, so we think that if we come in, we are going to get annihilated. So we did a hard pass on it, and I’m going to ask you to do a hard pass. A stock like Lumentum that is up in a straight line, it’s just too dangerous for me. I would be a seller, not a buyer.

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