Lumentum Holdings Inc. Common Stock Citi’s 2026 Global TMT Conference

Well, this is important. This is really important.

Yeah. Let me jump in here. I think the AI really is, we are at the very beginning of AI, right? If you look at the whole industry here, yesterday we saw in this article talking about Anthropic in a year signed up $517 billion worth of compute, right? Today, the demand of AI way exceeds that of supply, and we are not seeing it changing. It is very different from the past cycles of optical, which is really for infrastructure, for communications. This is really for the intelligence, the generation, and also serving the intelligence. So, the demand is just absolutely crazy. We do not see that changing for the next at least couple of years, if not longer. As a result, as AI making progress into faster throughput, bigger models, more specification, the agentic AIs, the connectivity requirement is also increasing.

Every generation of GPUs or TPUs getting more and more bandwidth. With copper running into the limitations of physics, more of the optical has to be used for interconnecting this XPU. Therefore, we are seeing the demand for optical connectivity is also increasing as generations goes on. Therefore, we feel both the demand side and also the technical requirement continue to escalate, and all this actually is good for the optical world that we are in today.

Papa, if I could just add on to that. Thank you again for hosting us at the conference. It has been just a fantastic conference for us. We really appreciate that. I will just add on to what Wu Pan just said. If we think of Data Center Interconnect or the telecom market being sort of a 1x multiple, what we are seeing now for scale-across is probably 10x of what we saw for DCI. What we are seeing now for scale-out is probably 10x of what we are seeing for DCI. What we are seeing for scale-up, starting in the second half of 2027 for the first instance of CPO going to scale-up, is probably 3x to 4x above the 10x that we are seeing for scale-out. Then when all of scale-up goes optical, it is probably a full 10x above the 10x of scale-out.

There are many multiples of optical bandwidth that we are needing to deploy in data centers, and we are not yet even talking about scale in. I think you may have a question for us later on scale in. There is another 10x multiple there, so it is mind-boggling in terms of what we are enabling in terms of enabling the compute.

Yeah, I think it is still extending, right? Today, we are still short everywhere, right? The laser, think laser, for example, we are short. DML is short. CW laser is short. We do not see the shortage going away in 2027, right? I think 2027 is going to be another major year. People forecast just the scale-out module is going to be doubling the volume on 2026 to 2027. Laser supply is not really catching up to it, right? In 2028, the scale up is going to happen, are going to drive yet another 3 to 4x of increase of demand. So we really do not see the laser supply-demand gap actually close within the next couple of years. We are doing the very best we can.

To this day, we are still allocating capacities, in some cases based on pricing, right, expedite fees and things like that in order to make sure that we serve to the most profitable opportunities. That is the case today. The pricing remains very healthy. All the deals we are making today are equal or higher pricing than the escalated pricing that we already had before. So overall, we are seeing the pricing environment continue to be very favorable, and that is a kind of a signal that the supply-demand gap still remains.

Yeah, sure. Again, thanks for the setup there. Since our last earnings call, we learned that we have more opportunity in OCS than we previously had understood. That visibility in OCS enables us to be very confident about, for the first time I think ever, putting out a fiscal year 2028 guidance on EPS of $40. The upside that we are seeing from OCS enables us to get there, and that OCS upside is coming from our largest customer, and it is a function of more units. More units that we need to ship to them, and it probably is in large part due to their success in the market and in our success with them in enabling their success in the market as they begin to sell hardware.