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Lumentum Holdings Inc. (NASDAQ:LITE) is one of the 10 Best Performing AI Stocks to Buy. On April 10, Aletheia Capital raised its price target on Lumentum Holdings Inc. (NASDAQ:LITE) from $500 to $1,225 and kept its Buy rating on the stock.

The research firm pointed out that the large increase in the price target reflects significant upgrades to its earnings per share forecasts. Aletheia Capital now expects the company’s earnings per share to grow four times between fiscal years 2026 and 2028. This growth is expected to come from revenue expanding by 2.5 to 3 times and a 15 percentage point improvement in margins over the same period.

Aletheia Capital pointed to three structural tailwinds supporting this strong outlook. First, demand for EML lasers is stronger than expected, with a compound annual growth rate of 75% to 80% supported by the rapid migration to 200Gbps diodes, which is doubling content value. Second, Lumentum Holdings Inc. (NASDAQ:LITE) is continuing to gain market share and currently holds about 90% share in the 200Gbps segment. Third, sales of OCS are expected to see significant growth in fiscal years 2026 through 2027.

Aletheia Capital noted that Lumentum Holdings Inc. (NASDAQ:LITE) is one of the fastest-growing stocks in the AI supply chain and the firm continues to include the stock in its Alpha Portfolio.

Lumentum Holdings Inc. (NASDAQ:LITE) designs and manufactures innovative optical and photonic products and technologies that power the networks and infrastructure behind AI, cloud computing, and next-generation communications.

While we acknowledge the potential of LITE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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