- Lumentum sits at AI networking’s laser bottleneck: qualified indium-phosphide capacity and process consistency support pricing power as copper reaches bandwidth, power, and distance limits.
- FY2026 revenue rose 83% to $3.01 billion; Q4 non-GAAP gross margin reached 50.4%, while OCS exceeded $90 million and 1.6T shipments began.
- Management targets $40 FY2028 non-GAAP EPS; the author models $11.1 billion revenue and applies 30x, implying $1,200 versus $954.49, or 25.7% upside.
- Despite positive long-term conviction, the author finds 15.4% risk-adjusted upside insufficient and waits for a significant dip; execution, customer concentration, indium supply, dilution, and cash conversion matter.
Investment pitches
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87 86 - VRT supplies power, liquid cooling, and modular infrastructure as AI racks rise from 10–15kW to 100–120kW; the author sees power and thermal capacity as the key bottleneck.
- Its integrated offering, multi-billion-dollar backlog, and service opportunity support the thesis; Q1 2026 Americas organic sales grew 44%, while Q2 sales reached $3.27 billion, up 24% year over year.
- Author models FY2027 revenue of $18.5 billion, a 24.5% adjusted operating margin, and $3.6 billion net income; 40x forward P/E implies $369.23/share versus $257.06, or 32.1% risk-adjusted upside.
- Despite bullish long-term fundamentals, the author will not initiate a position: valuation leaves insufficient margin of safety, while capacity, quality, grid permitting, and cooling-technology risks remain.
85 - Author sees Astera expanding beyond its roughly $2B retimer market; Scorpio targets open-standard scale-up interconnects, with SAM estimated at $25B by 2030.
- Q2 2026 revenue reached $392.4M, up 104% year over year, at 73.7% non-GAAP gross margin; Scorpio’s earlier ramp supports the growth case.
- Author models FY2028 revenue of $4.5B and net income of $1.71B, applying 55x P/E for a $495 target versus $310.40, or 59.5% upside.
- Despite that modeled upside, the author sees better risk-reward elsewhere and prefers Credo; Scorpio scaling, SBC dilution, competition, supply constraints, and optical shifts remain dependencies.
78 - CRDO’s 40% selloff contrasts with 115% year-over-year revenue growth, 140% non-GAAP net-income growth and ~68% gross margins; its connectivity products address GPU-cluster data bottlenecks.
- AVGO’s AI revenue rose 221% to $16.7bn; management projects $58bn in 2026, $115bn in 2027 and $230bn in 2028, led by custom silicon. Customer concentration and hyperscaler-spending risk remain.
- ORCL’s $638bn backlog (+363%) and 77% cloud-infrastructure growth contrast with $23.7bn negative annual FCF and debt/equity-funded expansion. Reported OpenAI commitments could make backlog conversion justify the financing burden.
- SK Square trades at ~₩1.0m versus ~₩1.8m NAV, mainly SK Hynix, while management targets a sub-30% discount by 2028. Samsung’s HBM4 ramp offers AI-memory upside, but foundry yields and TSMC’s lead remain risks.
83 - CRDO’s AEC leadership is expanding via DustPhotonics into 800G/1.6T optical networking, positioning it across intra-rack and inter-rack connectivity.
- FY26 revenue reached $1.33B (+205%); management expects FY27 optical revenue above $600M and total revenue growth above 80%, but the ramp still depends on qualification and adoption rather than disclosed binding commitments.
- Authors model FY28 revenue of $4B, net income of $1.32B and a 60x forward P/E, implying a $406.15 target versus $234.82, or 73% upside under those assumptions.
- Key offsets are DustPhotonics integration, hyperscaler and Taiwan/Asia concentration, and $182.6M of FY26 stock compensation against $407M of FCF, creating dilution.