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Lumentum (NASDAQ:LITE) just got a major vote of confidence from Barclays, sending its stock up 5% this morning. The firm flipped its rating from Underweight to Overweight and jacked up the price target from $80 to $125, citing an explosive surge in hyperscale demand and a growing shift toward U.S.-based supply chains. Barclays had doubts about Lumentum scaling beyond Alphabet (NASDAQ:GOOG)not anymore. Hyperscalers are onboarding at lightning speed, and that changes everything.
The semiconductor sector lagged the S&P 500 in 2024, but AI-driven momentum kept semiconductor-heavy ETFs like SMH ahead of QQQ. Barclays is betting big on Lumentum's 59% year-on-year port count jump and a 76% datacom revenue spike in 2025. That's why they're getting in earlyeven with management guiding lower for Q1, they see the long-term upside as too big to ignore. Meanwhile, Coherent (NYSE:COHR) is also in the mix, but asset divestitures keep it tied down for now.
For investors, the takeaway is clear: AI-driven infrastructure spending isn't slowing down. Lumentum is riding a wave that only gets bigger from here. With hyperscalers rushing to secure supply, this could be the start of a major run-upand Barclays just made sure Wall Street is paying attention.
This article first appeared on GuruFocus.