Key Highlights

● Lumentum jumped on Friday after its chief executive said optical capacity is sold out through early 2029.

● Michael Hurlston said the company cannot meet about seven-tenths of Demand for some products through next year.

● The stock traded at about $1,112 premarket and held a solid gain through the session on the Nasdaq Composite.

● Coherent, Applied Optoelectronics, Ciena and Corning also moved higher while the PHLX Semiconductor index slipped.

Lumentum Holdings (NASDAQ:LITE) jumped on Friday after its chief executive delivered a striking comment on demand. Speaking in an interview in Tokyo, Michael Hurlston said the company's optical capacity is sold out through early 2029. "We are completely sold out, with no end in sight," he said.

The stock had been trading at about $1,112 in premarket action, already well above Thursday's close, and it held a solid gain through the regular session to finish among the Nasdaq Composite's notable movers.

What Lumentum makes

Lumentum produces lasers and optical components that turn electrical signals into light and back again. Those parts are essential for the high-speed links that connect thousands of AI processors inside data centers and carry traffic between them. As AI clusters grow larger, the amount of optical bandwidth they need grows too, which has turned Lumentum into a key supplier to the AI build-out. The company also sells components for telecom networks and consumer devices, but data-center demand has become the main focus for investors.

Hurlston said that for some products, the company cannot meet about seven-tenths of demand through next year. He also indicated that relief is unlikely before 2029 or 2030, suggesting the shortage is a matter of years rather than quarters. For a supplier, that kind of Backlog can support pricing and visibility.

A welcome contrast to Thursday

The comments landed at a useful moment for AI-linked stocks. On Thursday, a media report said that OpenAI's annualized Revenue was about $50 billion at the end of September, roughly $20 billion below a figure that had circulated in late September. The report hit chip and infrastructure names hard, as investors questioned how long the AI spending boom could last.

Hurlston's message pointed the other way: demand for at least one critical part of the AI Supply chain far exceeds what can be built. Optical stocks rallied together. Coherent (NYSE:COHR), Applied Optoelectronics (NASDAQ:AAOI), Ciena (NYSE:CIEN) and Corning (NYSE:GLW) all moved higher, according to market data.

That strength set optics apart from the rest of the chip sector. The PHLX Semiconductor Index slipped on Friday, Nvidia (NASDAQ:NVDA) lost $1.20 to $229.28 and AMD (NASDAQ:AMD) fell $12.58, while software and Cybersecurity stocks led the broader rebound.

Market backdrop

The Nasdaq Composite rose 172.83 points to 27,366.17, the S&P 500 added 46.18 points to 7,811.54, just shy of Tuesday's record close, and the Dow gained 423.31 points to 51,654.95. On the Nasdaq, advancing issues beat decliners 2,756 to 1,997, though Volume across US exchanges was light.

"Chips have been this year's story," Michael Monaghan, portfolio manager at Founder ETFs, said. Rates remain a headwind for growth stocks: the 10-year Treasury Yield held near a 24-year high, and the Fed, which raised rates in September for the first time since 2023, has signaled further hikes. Fed Governor Christopher Waller said: "For at least the near term, policy will be focused on the Inflation side of our mandate."

Capacity Expansion Detail and TSMC's October 15 Results Are the Next Reads for Lumentum

Monday, October 12 is Columbus Day, with stocks open and bonds closed. September consumer prices arrive Wednesday, October 14, followed by producer prices and retail sales on Thursday. Bank Earnings run from October 13 to 16, and the Fed meets on October 27 and 28. Investors will look for any further detail from Lumentum on capacity expansion and pricing, and for read-throughs from TSMC (NYSE:TSM)'s results on Thursday, October 15.