Meet Kevin on $LITE (Oct 29, 2026)
Lumentum is a compelling AI-photonics play, a huge opportunity still in its infancy; its stock should rise in Marvell's acquisition while Marvell's falls near term. Revenue grew 1.8x and gross profit 2.7x with 41% margins, showing pricing power; the loss was one-off debt repayment. Upside holds only if that growth is maintained, and Broadcom and Marvell are cheaper.
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Another company is called Lumintum, whose code is "lite," which is fitting given their work in the field of optical fiber lasers. Do you understand? Light. Anyway. It is a company worth $83 billion. That's why Lite's stock is rising .
You might think this makes Nvidia skeptical of fiber optics . No, Nvidia has invested $2 billion in Marvell and $2 billion in Lumintom. In both of them together. Nvidia has a collective investment of $4 billion.
Then you have something that pumps light, a device that emits light, right ? Lumentum makes those devices. Okay? We could then buy Lumentum, which pumps light.
I'm also really excited about Lumentum, and I'm a little annoyed because we were talking about Lumentum on the session members' livestream , and I was talking about how much I like them and how much I'm interested in them, but, you know, I wasn't convinced I wanted to buy yet.
So, I was a bit hesitant and cowardly , and I didn't buy their stock yet, and now their price is up 10% because of this acquisition.
Of course, you know, it does n't matter. But we were talking about Lumentum because this fiber optic thing is just getting started . I think it's still in its infancy. I know some people are saying, "Oh, it's too late ."
Lumentum is a manufacturing company. So, by acquiring Lumentum, Marvel will also gain manufacturing capabilities it doesn't currently possess, which is quite remarkable .
Obviously, Marvell's stock will go down, and Light's stock will go up. That's what happens every time there's an acquisition because Marvell doesn't have the money. Well, they don't have $83 billion stacked up.
They have about $6 billion in cash. That's it. So, it's going to be done through debt and equity. That's going to dilute the stock value. Yeah, Light will have some cash on its balance sheet too, but not a lot, man.
They have $3.8 billion in bills and $3.4 billion in cash and receivables. So, there's no cash in their $80 billion market capitalization . So, you're going to have to take on debt and issue equity to do this at Marvel .
So, yeah, Marvel's stock is going to go down in the near term. But they're building a behemoth . That's amazing.
Oh, anyway, this is a huge opportunity in photonics for the AI boom, just like what happened with memory. So, there's been this boom , and the stock has dropped a lot since we did that analysis.
Oh, and I thought it was cheap, but it was a bit pricey back then. So, in the last four weeks, the stock has dropped a bit. Oh, I said at a P/E ratio of 1.2, there are cheaper options like Broadcom and Marvel, they're actually cheaper.
However, I said this still has upside potential if it can maintain this growth, and it should go higher with the "hardware 2.0" I see coming, you know , after the situation in Iran.
They're seeing net revenue grow 1.8x, and gross profit up 2.7x. So, you're talking about massive pricing power here. Their operating expenses are up only 14%, and their profit margins are 41%.
That's really tempting, man. Yes, we recorded a loss here. Why did we lose that ? It was because of debt repayment. So, you've kind of got to ignore this crap over here on the right. It's a one-off.