Key insights
- The author believes Lumentum ($LITE) and Coherent are well-positioned to benefit from the increasing demand for high-speed interconnects in AI clusters. They anticipate significant upside potential through 2030, driven by the shift in bottlenecks towards communication between GPUs. The author notes the stock's strong performance and expects sell-side analysts to raise their price targets, indicating a bullish outlook for Lumentum.
Today, the bottleneck revolves around Power and Memory. The bottleneck will shift as clusters scale and millions of GPUs need to talk to each other. Lumentum and Coherent are the only real ways to play that shift. It's not cheap and depends on if we can successfully deliver in the first 2 layers of the AI supply chain. But, it's where I see the most upside through 2030 from here. The chart looks absolutely incredible. Anyone who runs real money knows that liquid stocks tend to attract a higher multiple. Theres a reason this thing barely pulled back during the March selloff. Most semi analysts are not ready for whats to come and this is one of the names where Sell side is lagging on their price targets. I love seeing stocks where the price just keeps moving faster than they can adjust their targets up. 400-500B between each of these two stocks provides an excellent risk reward.
Edit - i love it when everyone else thinks it just cant go any higher. that sentiment is the mathematical reason for why it WILL go higher. i love trading and especially fading reddit.