On the back of strong confidence from hedge funds and Wall Street, Lumentum Holdings Inc. (NASDAQ:LITE) is one of the best AI infrastructure stocks, with upside potential of 28.7%.
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On June 1, 2026, Lumentum Holdings Inc. (NASDAQ:LITE) announced agreements with noteholders to exchange approximately $650.4 million of its 0.50% convertible senior notes due 2028 for roughly 5 million shares of its common stock. Lumentum will receive no cash from the transaction, but the exchanged debt will be canceled. After the deal closes around Thursday, approximately $172.2 million of the convertible notes will remain outstanding. The company added that the exchange will result in modest additional share dilution of about 0.8 million shares tied to the principal amount.
That announcement came as the stock already carried strong momentum.
On May 5, 2026, Lumentum Holdings Inc. (NASDAQ:LITE) guided fourth-quarter revenue between $960 million and $1.01 billion, ahead of the analyst consensus of $908.3 million, and projected adjusted profit of $2.85 to $3.05 per share against estimates of $2.68. The guidance followed a strong fiscal third quarter, where revenue rose 90.1% to $808.4 million, beating estimates of $804.3 million, and adjusted earnings per share came in at $2.37 versus the $2.29 consensus.
In response, analysts struck a constructive tone.
On May 7, 2026, Barclays raised its price target to $1,000 from $750, keeping an “Equal Weight” rating, citing a clearer line of sight to $25 in earnings per share in 2027. That same day, Morgan Stanley lifted its target to $900 from $710, also at “Equal Weight,” noting that fiscal Q3 results and Q4 guidance were largely in line but may prompt near-term digestion given the stock’s run. Lumentum Holdings Inc. (NASDAQ:LITE) is up nearly 140% so far in 2026, with 20 out of 25 covering analysts holding bullish views.
Lumentum Holdings Inc. (NASDAQ:LITE) provides optical and photonic products. It operates through two segments: Cloud and Networking, which deals with optical and photonic components, modules, and subsystems, and Industrial Tech, which includes solid-state lasers, kilowatt-class fiber lasers, ultrafast lasers, diode lasers, and gas lasers.
While we acknowledge the risk and potential of LITE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LITE and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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