Lumentum and Applied Materials Outperform in AI-Driven Market Amid Nvidia's Slower Growth The semiconductor sector has seen a stark contrast in performance in 2026, with companies like Lumentum Holdings and Applied Materials experiencing significant stock gains, while Nvidia’s shares have lagged despite consistent quarterly results. Lumentum’s stock has surged 121% this year, and Applied Materials has climbed 67%, both benefiting from surging demand for AI infrastructure. Meanwhile, Nvidia’s shares have only risen 12%, well below the 74% gain in the PHLX Semiconductor Sector index. This divergence highlights the varying degrees of success among chipmakers in capitalizing on the AI-driven market expansion. Lumentum’s strong performance is driven by its role in the optical component market, which is expected to grow at an annual rate of 21% through 2029, reaching $30 billion in revenue. The company’s first nine months of fiscal 2026 saw revenue jump 72% year over year to just over $2 billion, with guidance pointing to a current quarter revenue of $985 million—more than double the $480.7 million recorded in the same period a year earlier. This growth is fueled by AI-fueled demand from data centers, where Lumentum’s products are in high demand. The company’s data center offerings also carry higher margins, contributing to its robust earnings growth. Lumentum’s earnings per share (EPS) rose 4.5 times year over year in the first nine months of fiscal 2026, reaching $5.27. Analysts expect this trend to continue, with the company’s revenue growth translating into healthy earnings growth. Despite trading at a forward P/E ratio of 56, the stock’s valuation is seen as justified by its rapid earnings expansion. If Lumentum achieves $28.#nvidia #ai_infrastructure #lumentum_holdings #applied_materials #phlx_semi_conductor_sector
